[This Transcript is Unedited]

DEPARTMENT OF HEALTH AND HUMAN SERVICES

NATIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS

SUBCOMMITTEE ON STANDARDS

June 17, 2011

Double Tree Hotel
300 Army Navy Drive
Arlington, VA 22202

Proceedings by:
CASET Associates, Ltd.
Fairfax, Virginia 22030
(703) 266-8402

CONTENTS


P R O C E E D I N G S

Agenda Item: Welcome/Introductions

DR. WARREN: I would like to welcome you to this set of hearings to take a
look at where we stand with the implementation of 5010 NCPDP Version D.0 and
3.0 and ICD-10. One of the tasks that the subcommittee has is to keep on top of
monitoring of where we are and to advise the secretary on that.

I would like to welcome you to the hearings on implementation and updates on
the new HIPAA standards and code sets for X12 Version 5010, NCPDP Version D.0,
and Version 3.0 and ICD-10. One of the tasks given to the subcommittee of
standards in NCVHS is to monitor the implementation and to keep the Secretary
of Health and Human Services advised as to the status.

With that, I would like to start introductions. What I want everybody to
know is my co-chair is stuck in traffic. We have given him dial in directions
so he should be on the phone momentarily. We probably could see him out the
window. I don’t know. But I thought we would go ahead. We have a very tight
agenda today and hopefully he will show up while we are in the middle of
introductions and so to start with that I would like members of the
subcommittee to identify themselves, where they work, that they are a member of
the subcommittee, and whether or not they have any conflicts. I will begin by I
am Judith Warren. I am co-chair of the Standards Subcommittee, member of NCVHS.
I am from the University of Kansas, School of Nursing, and I have no conflicts.
Lorraine.

MS. DOO: Lorraine Doo with the Office of E-Health Standards and Services at
CMS, lead staff to the subcommittee, and no conflicts.

DR. CHANDERRAJ: Hi. I am Dr. Raj Chanderraj, a practicing cardiologist from
Las Vegas. I am a member of NCVHS and member of the Subcommittee on Standards.

DR. SCANLON: Bill Scanlon, National Health Policy Forum, member of the
subcommittee and then the committee and no conflicts.

DR. FITZMAURICE: Michael Fitzmaurice, Agency for Healthcare Research and
Quality, liaison to the full committee, staff to the Quality and Standards
Committee, no conflicts.

MR. COUTS: My name is Todd Couts from Noblis.

MS. STAHLECKER: I am Chris Stahlecker from the Centers for Medicare and
Medicaid Services and no conflicts.

MS. PHELPS: Ruth-Ann Phelps, Department of Veterans Affairs, no conflicts.

MS. COLEMAN: Kelley Coleman, Department of Veterans Affairs, no conflicts.

MS. REED: Elizabeth Reed, CMS, Division of State Systems, no conflicts.

MR. HANDLER: Chris Handler, Ketchum.

DR. WILLIAMSON: Michelle Williamson, CDC’s National Center for Health
Statistics and staff to the subcommittee.

DR. PICKETT: Donna Pickett, National Center for Health Statistics and staff
to the subcommittee.

DR. COHEN: Bruce Cohen, Massachusetts Department of Public Health, member of
the National Committee, no conflicts.

DR. CARR: Justine Carr, Steward Health Care Boston, chair of the full
committee, member of the subcommittee, no conflicts.

(Introductions around room)

MS. GREENBERG: This is Marjorie Greenberg from the National Center for
Health Statistics, CBC with another travel saga I won’t bore you with. I am the
Executive Secretary to the committee and nice to see you all here.

DR. WARREN: Walter is having his own travel sage as we speak.

MS. GREENBERG: Today I wisely decided to drive and they closed all the roads
in Northern Virginia. I had to bail out at Rosslyn, park my car and then take
the subway. He lives in Northern Virginia.

DR. WARREN: We just phoned him with the dial in directions so he is going to
be dialing in. He is on the phone. Walter, are you on the phone?

DR. SUAREZ: Hi. Good morning. This is Walter. Can you hear me?

DR. WARREN: Yes, we can. Introduce yourself.

DR. SUAREZ: Thank you. Good everyone. This is Walter Suarez. I am today a —
member of the committee transmitting from one of the freeways in DC. I am a
member of the committee. I am a co-chair of the Standards Subcommittee and I
don’t have any conflicts. Thank you.

DR. WARREN: Is anybody else on the phone?

MS. LOUIE: Holly Louie, Healthcare Billing and Management Association.

MS. BUTLER: This is Rhonda Butler from 3M Health Information Systems and I
have no conflicts.

DR. WHEELER: Gladys Wheeler from the Office of E-Health Standards and
Services at CMS.

MS. GREENBERG: I will clarify that only members have to declare conflicts.

DR. WARREN: Walter, since you are on the phone, do you want to give any
opening comments?

DR. SUAREZ: Well, first of all I wanted to thank everyone for coming and for
engaging in today’s very important dialogue about the state of progress for
implementation of ICD-10 and particularly the implementation of 5010. I think
it is going to be a very rich discussion. I very much look forward to seeing
you all hopefully in a few minutes.

I don’t have any other opening remarks, but just to hope that the discussion
today will be very open and frank and rich, and will lead us to understanding
now that we are just at the verge of implementing the first transition to the
next version of HIPAA standards, to highlight what are some of the most
critical elements that we need to think of and particularly as we look now into
the transition into ICD-10 also what are some of the most critical transition
issues on that point. That is all.

DR. WARREN: I would like to give everybody just a few orienting comments to
the meeting today. When Walter and Lorraine and I planned the meeting, we tried
to get all the different voices about implementation at the table. We are going
to start out first with a federal update looking at the different agencies in
the government to see where they are with implementation of the standards. We
will take a break after that panel. We will then after break move on and listen
to health plans, clearinghouses, and vendors, and then have another break for
lunch.

In the afternoon, we are going to be listening to other kinds of people that
are involved in this implementation and various industry stakeholders. Another
break. This is to clear your minds so you can hear the next cluster of
messages, and then we will be listening to the providers.

Lorraine and I are going to try to keep everybody on time. Lorraine has
cards with time on it. She is going to watch the time and I am going to be the
traffic cop that will cut you off. There are times for the committee to ask
questions at the end so you will have your full amount of time without
questions and we hope that we will gather everything.

If you feel because we are so short on time that your entire message was not
captured, we do welcome any further communication through email with Lorraine
or sending us letters or anything like that and we will read those. Walter and
I are pretty good about paying to attention to all the little details.

After that, we are hoping to have about 20 minutes left for public comment
and open microphone. We will try to give everybody a chance there.

With that, I would like to get us started. In the agenda for the first panel
I understand that Donna and Rhonda are going to go first and then after that we
will go right down the line. Donna.

Agenda Item: Session I – Federal Update

Agenda Item: Donna Pickett, NCHS and Rhonda
Butler, 3M

DR. PICKETT: Good morning. Thank you. I am joined by Rhonda Butler on the
phone so that if there are any technical questions that come up about the GEMs,
Rhonda will be able to assist in responding to those particular questions.

The first two slides basically are background information about the general
equivalence maps that CDC and CMS have created as tools to assist with the
transition from ICD-9, CM codes up to the ICD-10-CM and ICD-10 PCS code sets.
The GEMs can be used to assist in converting ICD-9-based systems or
applications. It is not a crosswalk and I will talk about that a little bit
later, but it will assist in migrating historical data to ICD-10
representation. This is something that is important to NCHS specifically
because of our role as a statistical agency using survey data. It is very
important because all of what we have is coded data. We don’t have medical
records or source documents as a starting point. The GEMs can also be used for
general reference.

One entry in a GEM identifies relationships with one code in the source
system. For instance, the ICD-9-CM to ICD-10-CM source would be the ICD-9-CM.
The target would be the ICD-10-CM. And it shows the relationship, the very
complex relationship between the codes.

Each GEM file contains an entry for every source system code and the GEM
file only contains those target system codes that are plausible translations.
To break that down for those of you who aren’t familiar with the GEMs.
Basically what that means is using ICD-9-CM to ICD-10-CM GEMs as an example.
The ICD-9-CM GEMs would have all ICD-9-CM codes contained in it, but it would
not have all ICD-10-CM codes because for many things that are in ICD-9-CM if
any concepts have migrated or changed or have been deleted, it may not have a
comparable code in 10-CM, but also since laterality does not exist, for
example, in the ICD-9-CM code set, you would not find all ICD-10-CM codes in
the target system because laterality is not something that you would have in
ICD-9-CM.

What the GEMs are not. The GEMs are not crosswalks. Crosswalks assume a
one-to-one relationship. And, again, as I have just described, the GEMs are
much more complex than that trying to identify all the plausible translations
from one code set to the other.

And GEMs are not a substitute for learning how to use the ICD-10 code sets.
In other words, if you are trying to code a record, you shouldn’t be using the
GEMs to apply the code. You should be actually using the code books. And if you
are wondering why that is there, I have had a lot of people ask me specifically
about that so I thought it might be a good opportunity to include it even
though I am sure many of you in the room are already aware of that, but since
we also know that these will be posted on the website, I think it is probably a
good reminder.

The GEMs in the ACA requirements there was a provision that tasked the
ICD-9-CM Coordination and Maintenance Committee to convene a meeting to receive
stakeholder input regarding the GEMs for the purpose of making appropriate
revisions to the GEMs. The section also further specified that any revised GEMs
would be treated as a code set for which the standard was adopted by the
secretary.

To meet the requirement on September 15, 2010 we devoted the first half of
the first day of the Coordination and Maintenance Committee meeting to
discussion of the GEMs as required. That was the only meeting that was going to
be convened to discuss the GEMs. And interested parties and stakeholders were
asked to submit their comments in writing. Also, during the meeting some of the
attendees also provided oral comments in conjunction with their written
comments. The deadline for comment was November 12, 2010.

A high level overview. We have received extensive public comments on the
GEMs. We have received approximately 5200 comments on GEMs and the comments
were received from a broad cross section of the healthcare industry, providers,
payers, vendors, independent consultants, and other individuals in the
healthcare system.

All comments and suggestions were reviewed. Recommendations meeting
inclusion criteria were incorporated. Of the 5200 comments submitted,
approximately a third were either implemented as part of the 2011 update or
supported what had been previously updated in the 2010 version.

Approximately 850 recommended changes. That is 16 percent of all comments
were new changes and were implemented. Another roughly 17 percent of the
comments supported again the previous changes and then over 2000 recommended
changes and that is roughly 43 percent did not meet the inclusion criteria and
we have a number of documents both on the CMS and CDC website relative to the
comments received. Much more detail if anyone is interested in that and there
is a web link.

For those GEM comments that didn’t meet the criteria, many really were
asking for additional alternatives to be added to the GEMs, but was not
supported by the instructional notes or the categories within the
classification. And then there were others where they were considered out of
scope because they wanted to have new codes created and the process for
updating the classification was not through this GEM comment period. And then
there were comments received on the CMS reimbursement maps which are also out
of scope as it was not covered by the ACA requirements.

For the 2011 update those files were posted December 2010. We did
accommodate the number of the changes that did come in. Also, updates occurred
because of the annual updates to the classifications themselves and we are
still going through a process where public comment is coming in independently
of having had an open comment period for the GEMs.

For 2012 we will be posting updated files at the end of this year. I believe
the CMS files for ICD-10/PCS are already posted. And, again, we will be
updating the GEMs to include relative to new codes. We have approximately 160
new codes that will be added to ICD-9-CM, which will also be reflected in
ICD-10-CM and changes to ICD-10/PCS. We have received other comments in the
interim period so we will be looking at those and incorporating them as
appropriate. And both agencies are still doing internal reviews and accuracy
and consistency checks as well. And we are encouraging everyone to keep the
comments coming so that we can openly discuss those as part of the ICD-9-CM
Coordination and Maintenance Committee process.

And the last file and I think I have made it in my time are links to the CDC
and CMS websites and again much more exquisite detail is available on the
websites. We have a number of technical documents and other summary documents
that may be of interest to people. Thank you.

DR. WARREN: It is just remarkable how much work has happened in a short
period of time. Our next speaker is Chris Stahlecker.

Agenda Item: Medicare Fee-for-Service(5010), Chris
Stahlecker, Medicare

MS. STAHLECKER: Good morning. Chairpersons and members of the subcommittee I
am Chris Stahlecker, director of the Division of Transactions and Application
Standards at CMS. I am here today to speak about the 5010 and D.0
implementation project because I have been the program director of that effort.

Because the subcommittee had asked for information about how the work was
addressed, the scope of work, some of the issues and resolutions to those
issues we have prepared our comments today to address those points.

Medicare fee for service just to frame it up. Processes. Approximately 1.2
billion claims annually. In 2010, 99.8 percent of the Medicare Part A claims
were received electronically and 97.5 of the Medicare Part B claims are
received using the current HIPAA EDI standards. The primary objective of our
5010 program was of course to modify the systems to exchange the in-bound and
out-bound HIPAA transactions using the new standard formats and the data
content that was changed in them.

In addition to the changes in the standard formats, Medicare’s approach
included two additional objectives. One was to prepare the way for the ICD-10
work by completing the expansion for the larger code values throughout the
Medicare suite of systems and to standardize the EDI edits and error handling
in the Medicare administrative contractors or MACs front end systems. Medicare
plans to complete this effort and meet the regulatory timeframes for 5010 and
D.0 while retaining or improving upon the high quality of EDI transactions
exchanged that we have achieved today.

To accomplish these objectives the 5010 and D.0 program address the Medicare
fee-for-service suite of systems in three major categories of work: the front
end systems, the core systems, and the downstream systems.

First, on the front end systems, the work included modification to key
software components in the individual MACs local data centers. The MACs trading
partner management systems needed to accommodate multiple versions of each of
the transactions in test and production modes. MACs were also required to
establish mid-tier environments in compliance with the CMS technical reference
architecture. MACs are required to obtain and implement COTS translators with
5010 capability. MACs are required to interface their COTS translator with new
CMS supplied shared system software called Common Edits and Enhancement
Modules.

CMS established a certification program consisting of use cases, test cases,
test scenarios, rather and data files. Each MAC was required to use the
certification test file in their unique environment and report deviations —
results. The objective of the certification program is to assess processing
consistency across the MACs. Medicare used one compliance tool, Edifecs, to
validate the certification test files.

Medicare also needed to consider the remaining legacy contractors, that is,
the fiscal intermediaries and carriers and whether they would need to be
upgraded to handle the 5010 version. The key consideration of making that
decision was first to give providers sufficient time to test with the new
formats, but at the same time we wanted to avoid wasting cost brought about
when a new MAC jurisdiction would be awarded and that would eliminate the
legacy contractor.

To address this dilemma a pairing between the legacy contractor and the
existing MAC was established. Providers located in a Medicare jurisdiction
where a MAC has not yet been established would submit 5010 test and production
transactions to their legacy contractor, their FIN carrier. That partnering
arrangement would permit the MAC to perform the 5010 EDI processing. The paired
MAC will route in-bound transactions to the legacy’s instance for Medicare
processing.

Then on the out-bound side of things the transactions would be sent to the
paired MAC for 5010 EDI processing and then return directly to the provider
trading partner. This permitted Medicare to enable providers to continue to
test even in jurisdictions where MACs were not up and ready.

There were also ancillary front-end systems modified for 5010 that included
Pro32 or PCAs which is Medicare’s free billing software: the Medicare
Remittance Easy Print or MREP, PC-Print for Medicare Part A remittance. And as
a part of our effort to further standardize the EDI process, Medicare has
implemented the 277 claims acknowledgement transaction or the 277CA. The MACs
will return a 277CA for each claim submitted. Accepted claims will contain a
claim number and rejected claims will contain codified explanation of the
errors.

While the 277CA is not a HIPAA standard at this time, it is an EDI standard.
And the Medicare version of Pro32 is capable of processing the 277CA to produce
a readable acknowledgement report.

The second major category of work is within the Medicare core systems. These
systems are those directly involved with the adjudication of payment of claims
including the Medicare Part A, Medicare Part B, durable medical equipment,
common working file, Healthcare Integrated General Ledger Accounting System or
HIGLAS, coordination of benefits or COB and crossover, HIPAA eligibility
transaction system or HETS, Medicare or secondary payer and other systems.

Early in 5010 and that goes back to the start of it in 2007 a data gap
analysis was performed to identify changes between the current and new HIPAA
formats. Each data element change was analyzed to determine impact to the
Medicare systems and change requirements were developed. Changes to the core
systems were coordinated and planned for implementation following the quarterly
release schedule. A joint application design session was held in April of 2008
and the very first implemented software component was in the October 2008
quarterly release.

The final major category of work is our downstream systems. This group
includes the systems and data warehouses supporting extracts and queries,
quality assurance programs, program integrity, risk adjustment research and
analytics. In addition to the expansion work for the additional iterations of
diagnosis codes in the larger field sizes, an indicator was added to the
internal claim records so that end users could easily and clearly recognize and
ICD-9 value versus ICD-10 code value.

Currently all systems have completed their planned scope of work or on
target for their scheduled implementation. The MACs began to exchange test
transactions in January of 2011 using the base version of standards and the
Errata versions of the standards were implemented with the April 2011 quarterly
release. Medicare Part B began the test of production transition at that time.
In May Medicare processed over 14,000 Medicare Part B claims in production that
were received in the 5010 format.

DME vendors have successfully tested, but have not yet requested to be
production submitters. Medicare Part A claims submitters that have successfully
completed testing may be promoted to production following the July 2011
quarterly release. Until that time all trading partners may exchange test 5010
transaction with MACs or legacy contractors.

The MACs participated in the National Test Day Wednesday of this week on
June 15 and in the next schedule National Test Day coming up they are prepared
to participate on August 24. Each MAC is registered trading partners that
intend to exchange test transactions on that day as part of the national test
effort and will conduct a brief survey shortly thereafter.

Medicare has conducted 16 national events, education events using audiocast
technology, more recently webinars. Each has been well attended including a
Q&A session. And in response to Q&A requests Medicare is holding
another — two more additional calls to address questions and the next is
scheduled on June 29.

Each MAC has also planned a series of outreach programs and these will
continue through the second half of 2011. Medicare is ready to engage in
testing the transactions with trading partners; however, the interest in
testing has been very light.

Trading partners are encouraged to test with MACs and raise awareness of
issues and we have some examples of issues that have been identified and some
of the resolutions reached. The first is the COB crossover had identified some
concern with the TR3 document, the Technical Report Type 3, which is the
equivalent of an implementation guide.

The 837 Institutional Claim TR3 did not allow for the definition of an
original internal claim control number in the adjustment claim situations where
you need the original claim sent over to the crossover trading partner and the
adjusted claim number as well. And this critical issue was addressed by
convening an urgent work session with X12 to locate where these data elements
could be placed within the COB claim.

The Medicare secondary payer issue that was identified that the claim
allowed and contractual amounts in a segment named CN1, they were removed and
that inhibited the ability to determine contractual amounts between primary
insurers and the provider.

A third issue that was identified was the elimination of the numerous AMT
segments, particularly two mentioned: AAE and B6 qualifiers in the AMT segment,
created a greater amount of concern. The issues have been raised most notably
by Medicare supplemental or Medigap plans that legally cannot pay beyond
Medicare’s approved amount. With input from the Medigap industry satisfactory
alternatives have been developed for calculating Medicare’s allowed amount
through the addition rather of the CAS or CAS Adjustment Segments that denote
beneficiary cost sharing, for example, deductible co-insurance blood
deductibles as well as late filing claim penalties as applicable.

The final specific issue we are going to point out is that the TR3, again,
the implementation guide for the 835 payment or remittance advice contains a
situational rule for a segment called the TS2. The rule states that the segment
is required for Medicare Part A and more specific rule is needed in the TR3 to
differentiate to state that the segment is required for Medicare Part A
in-patient claims, not out-patient. Currently the translate is used by the MACs
or failing remittances for out-patient claims that don’t contain the segment.

The issue was brought to the X12 working meeting last week and the X12 team
requested Medicare submit a request for information, an RFI, to X12. And once
received the official X12 response to the RFI will be the documentation needed
for translator vendors to make this modification and their mapping products.

Once the change has made to the products, an updated version of the
translators will be redeployed. MACs will receive and install and test the
upgrade product and Medicare will also need to issue a Medicare Learning
Network or an MLN article and potentially an emergency MAC change request for
the technical direction letter to address this issue in the short term.

All that is shared because when we recognize the problem late in the
process, as we are now, we are ready to go live, resolution of the problem
takes time and it is going to be an issue that we are going to need to face and
so urgently we are asking for testing to occur.

These issues exemplify that the devil is in the details and the issues such
as these are only surfaced when the transactions are exchanged by real users
with typical data for their business needs. CMS strongly urges providers and
their business associates to support their EDI exchange to engage in testing
now so that any needed corrections can be addressed.

Finally, Medicare fee for service is on target to fully implement 5010 on
January 1, 2012 and begin rejecting any in-bound 4010 transactions received
after that date. And at that time all out-bound transactions will also be in
the 5010 format. Medicare will stop generating the 4010 version.

I appreciate very much this opportunity to comment and thank you.

DR. WARREN: Just one reminder. Periodically look this way towards Lorraine
during your talks and with that I will go to Todd Couts.

Agenda Item: CMS – agency wide (ICD-10), Todd Couts,
Noblis

MR. COUTS: Thank you. Good morning. My name is Todd Couts and I appreciate
the opportunity to comment and participate today. Just by way of reminder I am
from Noblis and we are a contractor that is serving as the PMO contractor for
the Medicare implementation.

What I would like to do today are just two things. One is just to talk about
CMS’ role with ICD-10. I am sure the folks in the room know those roles, but
for the public comment and for the public record I want to make sure that that
is clear, and secondly, give you an update on CMS’ internal implementation for
the Medicare program.

CMS on this slide is really responsible for the rulemaking both the notice
of proposal making responding to the public comment and then the final
regulation that requires all HIPAA covered entities to upgrade to ICD-10. And
also as a covered entity, CMS is responsible for implementing ICD-10 for the
Medicare program and then for Medicaid which is responsible of state Medicaid
agencies to implement. CMS is responsible for the oversight of the state
implementations as well as technical assistance, and Elizabeth Reed will talk
about more that technical assistance later.

From an industry perspective, CMS also has a role of compliance monitoring
to really assess the status of covered entities and their progress towards
ICD-10 and also outreach in education to increase the level of awareness and to
educate various segments of the industry for the implementation, and Chris
Handler from Ketchum will talk more about the communications and outreach
program that CMS has launched.

Finally, there are a set of tools which Donna spoke about earlier of
certainly the GEMs and the reimbursement mapping and that really rich set of
information on the CMS website is part of the CMS effort and also the ongoing
role as the maintainer of the procedure coding system.

With that I would like to focus for the rest of my time on the Medicare
implementation and give you an update as to where CMS stands with this. First,
I will start with governance. There is a cross functional steering committee
established. It includes all of the components and organizations within the
agency that are impacted by ICD-10 and have a role in its implementation.

There is also a program management office established. This PMO is
responsible for establishing and maintaining an integrated schedule amongst all
of the policy areas, business processes, and systems that have to implement
ICD-10. And finally, there are distinct program areas identified each with a
lead with a team and those teams are responsible for the very detailed planning
for the implementation as well as the actual execution of a series of projects
to be ready for October 1, 2013.

CMS has also completed an agency wide impact analysis. I have included the
link to that impact analysis on the slide. CMS has made those documents
available on its website to communicate what it found internally for the impact
on the agency and also to serve as a resource for the rest of the industry for
their impact analysis.

Those project area teams that I have mentioned we started with the agency
wide impact analysis and then each project area lead has taken that broad sweep
and have done a very detailed impact analysis to lead into change request
development and the actual remediation activities.

With that done at this stage the project leads are in the midst of detailed
requirements definition and developing change request to initiate the changes
and in key areas that remediation has started.

Slide five is a visual of the organization of the ICD-10 program within CMS.
I mentioned the steering committee which is that cross functional steering
committee which indeed includes representation from all the impacted areas. In
addition, the executive sponsorship is coming out of the Office of E-Health
Standards and Services and this is really important because this has visibility
right to the office of the administrator within the agency.

The ICD-10 program also has a relationship with the 5010 program run by
Chris Stahlecker and you just heard from her. The two programs are really
staying closely linked to make sure that there is communication in both
directions since there is the dependency.

I spoke with the program management office and within that there are a
couple of functions. First is the actual program management. These are the
classic project management activities to keep all the various projects in sync.
There is the external outreach and the industry compliance monitoring which I
have mentioned earlier.

And below that there is a whole series of implementation projects. The
program has taken advantage of the existing project structures within and
processes within the agency and the actual implementation projects are running
through the organization.

Slide six is a history of where CMS has been with the impact analysis
efforts as well as the implementation. As you can see, there were actually two
phases of impact analysis. The first one was really designed to help CMS get
his hands around just how big this was and to really raise the awareness level
internally and get momentum for the implementation.

After that was done, there was a phase II of the impact analysis. This took
those initial results and with that a more detailed level to identify the
specific systems, the policies, and all the contractors that were impacted to
really launch the implementation program. And finally of July 2009 is when CMS
stood up the implementation program and the remediation activity started.

Slide seven is just a fairly busy slide just with a view of the result of
the impact analysis. The areas in yellow are the areas where there are impact
and these are some of the things you would expect: all the fee-for-service
claims processes, some of the related policy activities such as national
coverage determinations. As you go down, you will see program integrity,
medical review, and coordination of benefits. The key message here is that
certainly it impacts a large portion of the agency’s business and each of these
program areas is where the activities are occurring.

At the bottom are some pasted in diagrams and the point here is that we
certainly identified that were significant number of IT systems impacted within
the agency across the business lines such as fee for service and all the
quality programs. We identified about 75 IT systems that were impacted and we
have a fairly intricate set of documentations to understand those systems, what
the interfaces are, who the owners are and that was the foundation for
launching the implementation activities.

Slide eight is a view of the project structure. Each of these 18 project
areas has a lead and these are where the projects are occurring. Within each of
these program areas there is a whole series of policy projects. Those are
efforts, for example, to look at how the national coverage determinations are
implemented and to do the remediation to upgrade the ICD-10. Those program
areas include policy projects, business process as well as IT and this is
really the foundation for the PMO and how the program is being executed.

I wanted to just emphasize and hope this isn’t a surprise to anyone that CMS
is certainly pursuing an upgrade strategy meaning that CMS is not doing a
crosswalk that Donna mentioned earlier. CMS is certainly going through all of
its policies and the implementation of those and doing the full upgrade to
ICD-10 and not pursuing the crosswalk strategy.

The last two slides are just an update just to give you a taste of some of
the progress that has been occurring within the remediation phase. The first
topic is fee-for-service claims which surely are of interest to a large portion
of the industry. The project area team has been able to go through all of the
edits, all the things that the IT system to do to implement, to diagnosis and
procedure code-based policy, and have been able to categorize those edits into
the categories that you can see on the slide; things like local edits, local
coverage determinations, and being able to really lay those out in a real clear
way and has been going through methodically to upgrade those edits and to
define the replacement ICD-10 codes within those edits.

This team is also designing a national ICD-10 file. This will be a file that
the Medicare administrator contractors will use to really know what the
inventory of ICD-10 codes are and the file will include policy indicators to
help with the implementation.

The change request development has started, the shared systems, those are
the core claims processing systems. The change request for those is in process
and January 2012 will begin the first set of changes in those claims processing
systems.

The CMS has also decided that between now and 2013 any change request that
has anything to do with diagnosis codes must include both requirements for
ICD-9 and ICD-10 just as a way to make sure that everything is taken into
account.

Finally, I think a lot of folks in the room know this, but the DRGs, the
diagnosis-related groups, those have been updated for ICD-10. A lot of that
information is on the CMS website so that there is transparency into that
process.

And my last slide with my last 45 seconds. Just some highlights from the
other areas outside of fee for service and Medicare Part C. This is the
Medicare Advantage benefit within the Medicare program. The HCCs are completely
based on diagnosis codes. This is what takes the capitation payments and then
adjusts those to the Part C plans that contract with Medicare and the
remediation of those is in process.

Coordination of benefits is certainly an intricate area with this whole
program and CMS has defined its strategy for how to use ICD-10 to identify
claims that should go into the COB process.

The quality programs are significantly implemented and the quality measures
team has a strategy defined for re-specifying the quality measurement
definitions including interacting with external owners of those quality
measures and also updating quality measures that are within CMS’ control.

And next to last are the Medicare manuals, the main communications vehicle
to providers and other participants. There is a project team specifically
dedicated to that. They are interacting with the teams that are doing the
detailed implementation work and they will be working in parallel between now
and 2013 to make sure that those manuals are updated.

And finally, there is an effort to review all of the forms, all the paper
forms that might be impacted by ICD-10 and to work through the Paperwork
Reduction Act notice to make sure that those are upgraded on time. Thank you
very much.

DR. WARREN: Our next speaker is Ruth-Ann Phelps from the Veterans Affairs.

Agenda Item: Veterans Affairs – Provider, Ruth-Ann
Phelps, Veterans Affairs

MS. PHELPS: Thank you for the opportunity to make this presentation today.
These remarks will address three of the suggested topics specific to the X12
Version 5010 and NCPDP Version D.0 implementation which are applicable to VA as
a provider.

First, I will address current state of implementation; second, the risks
that we perceive; and third, our implementation concerns and mitigation
strategies. First, VA Health Care’s current state of implementation. As you
know, VA Health Care is the country’s largest integrated health care provider.
About 10 million insurance claims a year are submitted for health care, not
related to Veterans’ military service. VA does business with about 1600 payers
of which 200 account for most of our claims.

VA prepared for 5010/D.0 by first conducting a gap analysis in March 2009. A
governance board was then formed to oversee the system changes. The board
organized those changes into several functional areas that would move through
the software development lifecycle in a staggered approach. Of the 17
functional areas identified about 25 percent is either in requirements, design,
or the build phase. Another 25 percent is currently awaiting external testing.
The remaining 50 percent of the required system changes have been implemented
already and deployed nationally.

The remaining work considered most critical is testing with external
parties. We expect to conduct some external testing through front-end testing,
which we define as mapping and content validation with individual gateway
partners, including clearinghouses and fiscal intermediaries. This will be
followed by end-to-end testing defined as full revenue cycle and integrated
system testing with all gateway partners and payers. Specifically for us that
is from claims submission to AR posting.

To date, VA has not made significant progress on either front-end or
end-to-end testing with its various gateway partners. Since 2010, we have
worked in a concerted effort with gateway partners, established a biweekly
industry trading partner call to ensure all interfacing organizations could
effectively collaborate on timelines for testing. Despite this effort, only
minimal testing has occurred with partners and has been limited to exchanging
data files.

Testing with payers is progressing slowly. For medical claims, VA has not
yet tested with any payers. Outreach to payers for medical claims shows that
the bulk of the payer testing will likely occur in late 2011, which is a
significant risk. VA has been able to test with just one Pharmacy Benefit
Manager for primary pharmacy claims billing and has been unable to validate our
secondary billing process at this time. Again, outreach to PBM shows that most
PBM testing will occur in late 2011.

Second, the risk areas for industry compliance as we see them. The biggest
5010/D.0 compliance risk for us is concerned with the ability to perform
external end-to-end testing by this fall. End-to-end testing completed by the
fall would allow for adequate time to address and resolve system issues before
the compliance deadline.

End-to-end testing for VA is complex. VA medical claim transition originates
in our billing system and is transmitted through our internal gateway, then out
to our clearinghouse before reaching the payer or payer’s fiscal intermediary.
Similarly, inbound transactions travel the same path from the payer to our
clearinghouse/lockbox bank and then through our internal gateway before being
processed and payment posted in our collection system and ultimately our
general ledger of accounts. VA must ensure that a minimum of eight touch points
are validated as a part of medical claims operational readiness testing. A
slightly less complicated but similar process occurs with VA pharmacy claims
transactions.

Thus far, VA has identified very few payers and PBMs where any end-to-end
testing can be completed by this fall. Our perception is that end-to-end
testing will only be possible sometime after the fall, causing serious risk
that any identified issues will not be able to be resolved by the compliance
deadline.

And finally, our post implementation concerns and mitigation strategies. VA
has identified various post implementation concerns and has several mitigation
strategies in place. First, new rejections. VA has no history of managing any
new observed claim rejection codes that surface from the 5010/D.0. Resolution
of these new rejections will require additional resources, training, and time.
It is a concern that new rejections could potentially result in lost revenue
due to inadequate knowledge, or time needed to resolve new rejections.

Secondly, various payer systems. Testing can only go so far to validate the
operational fitness of the system. Experience with the NPI implementation and
4010 shows us that payers’ systems tend to be different. Given the number of
payers to which VA sends healthcare claims, it is impossible for us to test
with all payers. Even successful testing in 2011 with a key group of payers
doesn’t necessarily predict success with all payers. As new payers migrate to
5010, it is a concern that additional system issues will be identified that
will require additional system changes.

And finally, our mitigation strategies. We are employing several strategies
based on these concerns. First, VA plans to retain active development resources
through the first quarter of calendar year 2012 to address operational impacts
to revenue systems as we migrate payers to the new standard. These resources
can help address additional system changes that are identified with payers that
were not part of our testing. Additionally, business subject matter experts
will be retained to address trouble shooting and problem solving for these
areas such as new rejections.

Second, VA is targeting the most significant payers, based upon claim volume
or dollar amount to engage in testing before the fall of 2011. Working out
issues with significant payers before the compliance deadline will reduce
serious impacts to the revenue system.

And finally, this month VA released an EDI Transactions Support Internet
site intended to facilitate testing and communication between VA, partners, and
payers. The site is accessible by organizations outside of VA and presents
status on VA’s progress toward migrating its operation to 5010/D.0 transaction
standards. The site reflects VA’s readiness for external testing and provides a
direct contact to VA testing resources. The initial focus of the website
content obviously is the 5010/D.0 mandates, but the site has been built to
accommodate an ongoing EDI Transactions compliance mandates, such as EDI New
Standards and Operating Rules.

I have a handout that will be available for any partners or payers that
would like to have this access information. Overall, in our view, there are
significant risks to industry compliance by the 5010/D.0 deadline, and
significant concern over the emergence of post implementation issues. In
reality, given the current status of the implementation industry-wide, the
likelihood that all transactions will be transitioned by January 1, 2012 we
fell is improbable.

I hope these remarks have been helpful, and I thank you for the opportunity
to address this committee.

DR. WARREN: I certainly thank you. You have given us a wake-up call. The
handout you had about the testing, if you could make sure Lorraine, Walter, and
I get copies.

MS. PHELPS: Yes. And Lorraine sitting just behind you, has a number
available to hand out for anybody that can use them.

DR. WARREN: Great. That will be very helpful. Now we need to hear from the
other side of the house of VA. Kelley Coleman.

Agenda Item: Veteran Affairs – payer, Kelley
Coleman, Indian Health Services

MS. COLEMAN: Thank you very much for this opportunity to represent the
Department of Veterans Affairs, Veterans Health Administration. The Purchase
Care at the Health Administration Center of Business line operates and manages
several health care benefits programs, the two largest of which are the
Civilian, Health, and Medical Program for the Department of Veterans Affairs or
the CHAMPVA program, and the National Fee Program.

CHAMPVA provides health care benefits to approximately 380,000 eligible
veterans, spouses, and children. CHAMPVA is required by regulation to process
payments the same or similar to TRICARE policies and practices and as such we
utilize the TRICARE MS-DRG group for uncertain inpatient claims to comply with
that requirement.

The National Fee Program provides a mechanism for veterans to receive care
from non-VA providers in the community when such care is not available within a
VA resource. Last year the National Fee Program adjudicated claims for
approximately one million unique veterans all total purchase care paid out over
$6 billion for claims across all programs.

Purchase care initiated a variety of gap analyses once the 5010/D.0 final
rule was published. We looked at the full breadth of systems involved in
processing electronic health care and pharmacy claims for both payer elements
within our business line. The analysis while relatively straight forward
brought to light the stark differences and unique challenges between the claim
adjudication business models used within purchased care.

Specifically, the centralized nature of the CHAMPVA program and its
similarity to the traditional payer model provides a simplified flow of claim
data with all interfacing systems maintained by a single IT group. However, the
complexity of the programming changes is greater due to CHAMPVA’s relatively
sophisticated adjudication systems.

In contrast, purchase care’s national fee program EDI data flows between
many disparate IT systems which are enhanced and maintained by separate
contracted vendors and even separate VA IT groups. The core fee program claim
process application required relatively few modifications to accept and process
electronic claims for 5010, but the modifications were needed across as many as
10 different systems maintained by six separate IT groups.

We approached the overall effort by breaking the development into components
based upon the systems involved. Development contracts were put in place to
address modifications through front end and back end systems and enhancements
to existing commercial off-the-shelf software interfaces were coordinated by
each of those contracts. This approach allowed all the modifications for the
CHAMPVA program to be performed under a single development contract, but did
require that the fee program modifications be spread over three separate
contracts.

The 5010/D.0 project status risks and issues are routinely reported to
senior and executive management within the Veterans Health Administration
including periodic updates to Dr. Robert Petzel, the VA’s Under Secretary for
Health and the VA’s Chief Information Officer Roger Baker.

A 5010/D.0 overarching integrated product team was formed in late 2009. It
includes senior level business line and project managers from provider, payer,
and technical components within the Veterans Health Administration and together
we define requirements, planned and built acquisition packages, selected
vendors, coordinated project activities, and registered risks and issues. We
have championed the project within all levels of the VA and the executive
leadership in turn has provided financial and tactical support and continues to
closely monitor both 5010 and ICD-10 projects closely.

The identification and mitigation of risks and issues plays an important
part of our day-to-day management of these large projects. Risks to schedule
continue to dominate our management briefings and vendor discussions and are
visible at all levels within VHA.

Current risks revolve primarily around human resources, contract
constraints, coordination between interfacing systems, and dependencies on the
completion of other projects. All of these risks impact our ability to meet the
compliance deadline. And while current project scheduled show that we will meet
the compliance deadline, we are beginning a period of extensive internal and
trading partner testing and there is little room for error in today’s schedule.

Through the end of this year we will rely heavily on the step-up/step-down
services promised by our clearinghouse trading partner. The service removes the
necessity for coordinating version changes with all of our provider partners by
stepping up a 4010 transaction to a 5010 or stepping down a 5010 transaction to
4010 based upon the needs of the receiver. This allows us to avoid the
complexities of dual processing and will be key to any contingency plan we may
need to put in place should a substantial schedule risk be realized. It will
allow us to continue accepting transactions and current versions until such
time as we are capable of receiving and processing 5010/D.0.

Purchase care accepts transactions in from two trading places: our X12
clearinghouse and our pharmacy benefits manager and as such our testing
strategies focus primarily on those two interactions.

For X12 we will first kick off our real-time transactions, eligibility claim
status, and authorizations. We anticipate those will be in production by this
autumn. Our batch transactions for both NCPDP and X12 transactions are
scheduled to move into production on December 19.

The initial ICD-10 impact assessments for processes and systems were started
in early 2009 beginning with internal stakeholders and subject matter experts.
Early on the focus was primarily on gaining a high-level understanding of the
impending changes and the general impact on applications and processes. And
this was followed by gap analysis leading to the development of system level
business requirements, documents that identified changes to internal systems,
databases, internal and external interfaces, screen reports and system
generated letters and forms.

We also assess the impact on our existing policies. It was here we found
that our code-based business rule software module would require that each new
ICD-10 code be mapped within the business rules logic. This mapping was
completed through the use of the GEMs and reimbursement tools. From these
analyses we identified the advantageous to implementing ICD-10 included
reductions in costs and increase in auto adjudication. Full optimization will
require reengineering of certain business processes in order to fully
capitalize on those benefits.

As with 5010/D.0 purchase care actively participates in a VHA level
integrated product team for the ICD-10 conversion. The IPT consists of
technical business and stakeholder participants as is supported through
contracted facilitation resources. The technical development is being
outsourced with oversight provided by the IPT.

Purchase care will not use crosswalks or mapping tools for the adjudication
of ICD-10 claims. Instead we will maintain annual code set databases and apply
those code sets to inbound claims based on dates of service or discharge. With
that said, the CHAMPVA solution will utilize the GEMs mapping to apply existing
business rules to ICD-10 diagnoses and procedure codes. We do expect that the
ICD-10 version of the TRICARE group will be available in time to meet the
compliance date. After our compliance date, we will require providers to
utilize ICD-10 on both paper and EDI claims for dates of service on or after
October 1, 2013.

It is not uncommon for the VA to receive claims for prior years so we
anticipate adjudicated properly coded ICD-9 claims for at least seven years
after the mandate. We will deny claims that contain improper code sets for the
date of service.

Internally testing across VA medical centers is challenged by a lack of
enterprise wide testing structures. Participation of individual sites is
voluntary based on local determination of available resources. The environments
and control authorities vary by organizational entity and planning is underway
to define all necessary points for true end-to-end testing accommodating
multiple internal and external systems and multiple trading partners.

For ICD-10 the proposal for full and successful implementation informs us
that an active remediation should not begin later than the final quarter of
this year using contracted resources. There is watchful concern for potential
delays and procurement of technical resources and timely completion of the
necessary 5010/D.0 dependent projects.

At the program level, we have implemented formal risk management and are
currently actively focused on internal activities. While external trading
partners may enable improvements in ICD-10 test management and communication
structures, the general approach that payers should leverage personal
relationships in initiating this work provides a high-level concern for the VA.
We are not aware of any industry recommendations for the coordination of test
and service and believe that guidance of this type would be valuable for all
concerned.

In short, the VA payer entities are keenly focused on 5010/D.0 and ICD-10
deadlines before us. We continue to address emerging issues and risks, but have
virtually no room in our schedules for delays of any magnitude. Thank you.

DR. WARREN: Our next speaker is Janice Chase from the Indian Health Affairs.
Janice, you are on the phone. Go ahead.

Agenda Item: Indian Health Services, Janice Chase, Indian
Health Service

MS. CHASE: I am Janice Chase with the Indian Health Service. I work for the
Office of Information Technology in Tucson, Arizona. I want to thank the
committee for the time this morning.

An overview of what I will be presenting is a frame of reference for our
organization, our information systems, and where we are with implementation on
Version 5010, D.0, ICD-10, and then a summary of our key challenges.

The Indian Health Service has approximately 700 facilities in 35 states
ranged from hospitals that are open 24 hours, 7 days a week with emergency
rooms to health care centers that have some emergency rooms and are open for 40
years. Our stations are open; some usually less than 40 hours a week; some one
or two days. We also have residential treatment centers. We have privately
operated clinics in villages and we also support urban programs.

The RPMS system comes from the VA VistA system. We rely a lot on the VA file
structure and their progress of implementation. Our system is a comprehensive
health information system including clinical applications, a certified EHR that
has ancillary services as well as a practice management application where we
have full range of revenue cycle and billing. We also do case management,
decision support. We were certified as the first government EHR for both
hospital and ambulatory care services. We use the IT investment process for our
investment control with the EPLC and those are posted on our website and I
provided a link.

All of our federal and most of our tribal programs use RPMS. Over 90 percent
of our patients are served by IHS. We are allowed to bill both Medicare and
Medicaid and other third-party payers.

We have completely implemented EHR in most of our outpatient facilities
including clinics in Alaska. We have 29 hospitals that are currently using RPMS
EHR for inpatients. We also have RPMS outside of the Indian Health Service
organization in West Virginia, the Hawaiian and Pacific Islands, and Alaska.

This is a shot of where we are as far as implementation of the X12 5010. Due
to the other competing priorities that I just mentioned, a lot of that was with
the certification over EHR. And other mandates that we have we were not able to
actually start working on the 5010 until the beginning of this year. We have
begun internal testing and that is ongoing. We just started with FI
trailblazers to begin our external testing and we have identified a couple of
other payers, but we are still reaching out to other ones that would be ready
for more external testing. That just began in May of 2011. We hope to meet the
mandate but we have a similar concern that the VA had especially with the D.0
in identifying people that are ready to test.

As far as the ICD-10 implementation, we started our steering committee back
in November 2010 and we have established our subgroups and we are starting to
address to the ICD-10 implementation.

Snapshot of our timeline for the X12 phased release of the 837P and the
837I. We hope to have those released in May 2011 and September 2011. We perform
a practice-wide 5010 impact assessment with our payers through our area offices
which we have 12 of and we obtain a vendor’s plan for software updates and to
have some kind of a testing schedule. We hope to have a metrics developed after
monitoring our pre- and post-implementation and hope to have final plans to
update our software, practices, policies and procedures by the compliance date.
However, the 837I will not include any development for ICD-10.

The 837D and the 835 are both expected to be released in November. Again,
the same associated activities in the previous slide would apply to this with
the 837 not having any development work for the ICD-10.

This is our D.0 timeframe. We currently are looking to do some testing with
Emdeon. We have gone through all of the internal gap analysis planning looking
for development, done our internal testing, but we are also having some
challenges with identifying different people to test with. We are looking at
having a target date of testing in September to meet the external deadlines.

This is our ICD-10 implementation target date. As I said, we had high-level
planning that really began back in November. We started our awareness and
communication and we are still in the process of doing that because we do have
a wide-range of facilities from direct federal service facilities tribal as
well as urban and we continue to develop tools and processes to help facilitate
the transition and the awareness for our populations that we serve.

We have started requirements analysis and that is still in progress
following along somewhat the same file structure that the VA has. Our software
development hasn’t started yet, but we have begun to look at some of our
training approaches with implementation dates starting in February for the
intensive training for ICD-10 on the actual code set itself.

We hope to have everything ready for testing and deployment by June and to
begin implementation by September and for end-to-end testing to be ready for
the October date.

These are some of the activities that we have done with ICD-10
implementation by the establishment of our ICD-10 steering committee. We have
five subcommittees under that. We have really begun building more and more
organizational awareness and commitment identifying key stakeholders from the
executive level down to the service unit level in the field. We are currently
evaluating our systems and our interfaces where our codes are captured,
exchanged, and reported. Identifying our key risk areas and the mitigation that
follows with them trying to get more of our stakeholders involved in processes
and the policies and procedures that are going to be needed to be changed and
utilized and identifying our contractors and our business partners that rely on
the code.

Vendor readiness is one of our concerns that we have because we
substantially rely on our collection in order to provide services to the
populations that we serve. Also, evaluating our engine support for ICD-10
because we have dual billing that we will doing. Sometimes we can go and back
bill for up to two to three years. We will have to maintain those ICD-9 and
ICD-10 for a period of time. And ultimately to continue to update our business
plan and our work schedule for activities and for the milestones that we are
trying to meet.

The summary of our key challenges is our resource constraints. We are a
rather small organization compared to other organizations that are implementing
this and we find that we have the same people that are doing EHR certifications
that we are relying to implement the 5010 and sometimes we find ourselves even
competing with people within our organization in the development phase. We have
these competing priorities that we are trying to work with, but it is very much
a challenge when you have limited resources and other things have to really be
set aside in order to meet these mandates. Again, the big risk of our trading
partners and our preparation and its impact that it will have on Indian Health
Service and the population we serve due to the revenue.

One of the big concerns that we are starting to see now as we start getting
into more of the development and the analysis is to have expertise in ICD-10.
We have limited resources for people that actually even can train on the code
set because they are busy coding ICD-9 codes and trying to keep up with the
many changes that are going on in the current environment, but we are trying to
identify a way that we can implement this nationally so that we can have
someone on board to help with our internal testing and some of our training
needs that we can develop in-house rather than paying outside vendors.

Our challenge is that we have hospitals from Alaska to Florida and in these
remote areas in trying to get the same message and level of preparedness and
awareness is something that is a challenge to us.

DR. WARREN: Thank you very much, Janice. You did an excellent job over the
phone. We really appreciate the slides. They help a lot.

DR. CHASE: I really appreciate the opportunity to do this. We actually have
other people that work on the 5010, but I got the short straw. No, I am
kidding. They asked that we present on all the things that we are doing. We are
busy working right now on testing actually.

DR. WARREN: And I am glad you brought up the fact of the competing
challenges for the same resources.

DR. CHASE: Thank you.

DR. WARREN: Our next speaker is Elizabeth Reed from Medicaid.

Agenda Item: Medicaid/CMCS, Elizabeth Reed

MS. REED: Good morning everybody. It is my pleasure to be with you this
morning to provide you with an update on the state Medicaid agency’s progress
with the 5010 and ICD-10 implementation.

This first slide is just some of the accomplishments that CMS has as far as
providing assistance to the state agencies. A couple of things I would like to
point out are that we are monitoring the state’s progress through an online
readiness assessment tool. The results that I am going to share with you this
morning are from the April assessment and the next one scheduled is for July 1.

Something else I would like to highlight is our implementation assistance
handbook, the navigation tool that is on our website. It is a tremendous tool
that we created for the states that has everything pertaining to a project as
far as project management plan and other various tools inside of it to help the
states along with their project.

The next slide is a timeline that we created specifically for the states.
Right now they should be in the beginning process of their remediation and
finishing up on their assessment. Hopefully they are at this level in their
project.

The next slide is the 5010 readiness assessment based on conference calls
that we held back in December. We have four state Medicaid agencies that
indicated that they were struggling to meet the 5010 compliance dates. I will
share those states with you today. They are Nevada, Colorado, South Dakota, and
Vermont. We have asked for contingency plans from them and received two. Nevada
just received funding from their state and so they are going to start the 5010
implementation. The other state reported — I believe it was Colorado that they
intend on possibly using their portal in the meantime or have the claims
dropped to paper until they are ready. Not the answer we want to hear. The
third option was for them to hold their electronic transactions until the 5010
transactions were implemented.

Two of the states are having issues because they are implementing new MMIS
systems. They do not plan to remediate their old system. Despite the high
degree of confidence in meeting the 5010 compliance date we also identified
risks that have to be managed. There are five state agencies depending on the
MMIS replacement. There are two states that plan to use the step-up/step-down
program and there are also ten states that are still finalizing their testing
schedules.

Two of the main key issues reported for 5010 implementation is funding and
competing priorities.

This slide is the overall status of the agency’s 5010, D.0, 3.0 and ICD-10
status. With respect to ICD-10 at least 10 states indicate low risk and likely
to make it. Approximately 41 states are at moderate to high risk for meeting
ICD-10 compliance dates. We are still working with the small number of states
to assess risk. This is a snapshot in time and these states continue to
complete gap assessments and develop requirements and remediation for ICD-10
with technical assistance from CMS. We will take more snapshots in 2011 and
2012 as we move closer to the compliance of ICD-10.

As it relates to 5010, all but 4 of the 51 state agencies do not expect to
meet compliance dates. While most of the agencies indicated they would meet the
5010 compliance dates, states to manage risks, for example, testing.

I do want to share with you that we had about 11 states that participated in
the national 5010 testing day. I have heard back from one state, Kansas. This
is very interesting. I heard back from them yesterday. They indicated that they
had over 3000 trading partners/providers, but only had participating from two
trading partners. It will be very interesting to receive the statistics from
the remaining states.

This slide is the 5010 edit update status. There are four states who
indicated no edits/updates underway. The updated edits are under 5010 changes.
For example, this is regarding the X12 syntax edits and implementation guides,
et cetera.

There are nine states who indicated developed edits requirements and change
requests. Nine states indicated designed edit changes. Six states indicated
developed edit changes. Eleven states indicated performed tests. Three states
indicated edits transitioned and implemented and nine states did not respond to
the assessment.

This is a 5010 testing status from the results from the April assessment.
The two tables represent the states’ responses to the 5010 internal and
external testing questions. There were nine states that did not complete the
impacting implementation section of the assessment. Maryland is the only state
that indicated they have completed end-to-end testing for 5010.

This slide is regarding the ICD-10 impact analysis status. As of April 2011,
there are seven states that have completed an impact analysis and have begun
the implementation. Twenty-six states have initiated an impact analysis and
then 18 states have not begun an impact analysis. There are also five states
that did not complete the assessment and were assumed to have not started.

Again, here is some assistance that we are providing to the states. We have
the navigation tool and the link is on the panel here. And then we also have
regional office training materials. We just finished up visiting all the
regional offices and conducting an in-depth implementation training for the
states. We had well-received participation as well as comments regarding the
sessions. The training materials should be published by the end of June onto
our website which will include an audio so that if states need a refresher, it
will be available.

Our next step is going to be individual site visits. We are going to be
conducting interviews with the states in October/September timeframe to begin
our individual training sessions targeted for January of next year.

And then here are just some additional resources regarding ICD-10 and 5010
that we have provided to the states and then some links how to stay informed.
We have a wealth of information on our website and we keep reaching out to the
states. We participate in NEMI calls. We are also looking at creating forums
for the states to try and identify certain issues. As it pertains to ICD-10 we
have created a decision log which will also be shared in the very near future
with the states as far as policy questions regarding ICD-10 and any other
information that they may be requesting.

DR. WARREN: One request I would make is several of the slides you gave us
numbers of states that did different things. Could you make sure that Lorraine
gets those numbers so that we can refer to those in our report?

MS. REED: Yes. Absolutely.

DR. SUAREZ: I guess — instead of the percentages —

DR. WARREN: No. There was some that there is no numbers. I will show you the
slides.

Our last speaker for the panel is Chris Handler from Ketchum.

Agenda Item: Ketchum, Chris Handler

MR. HANDLER: Thank you. I would like to start by thanking the committee for
giving me this opportunity to come and talk to you a little bit about what we
have been doing in terms of industry assessment and some of the recent outreach
activities we have been conducting. Ketchum is a contractor with CMS. We are
working on communications and outreach to all the industry components.

Just to start the assessments that we have been conducting really have
focused on engaging the industry’s awareness but also preparedness for the
Version 5010 and ICD-10 transitions, but the second objective is also to make
sure that we have an opportunity to get direct input from various entities that
will then inform further outreach and education that we will be conducting.

The assessments that we have done to date really fall into two categories.
First were some qualitative in-depth interviews with primary audiences and were
limited in overall scope, but were helpful getting some initial data back. Then
we did a lower quantitative feedback assessment from the industry partner
organizations that we were working with, many of the organizations that are in
this room now. We will once we have secured OMB clearance which we expect later
on in the summer be doing a large-scale, industry-wide randomized survey and
that should have greater statistical power for us to analyze those results.

To briefly go over the design of the in-depth interviews they were basically
30-minute interviews by phone. They were conducted with each of the major
industry segments, vendors, payers, and providers. Nine participants from each
of those groups were interviewed. And we tried to make sure that we were
interviewing people who were decision makers from the organizations. That is
going to be different from the industry assessment that we worked with partners
on and I wanted to make that distinction here. These are people who should
understand what their organizations are doing and how they are pairing with
transitions.

When it came to providers, we tried to focus on small practices since we
know that there is greater risk there for those providers to successfully
transition.

To summarize the results of the in-depth interviews there was in general a
high confidence that the transition deadlines would be met although there was
still uncertainty about all of these compliance dates and milestones. The
participants said that they understood the consequences of not being prepared
for the transitions. And when it came to looking at specifically the providers,
we found that while most of the providers said that they had begun preparing
only one actually budgeted for the transition which was a little bit
concerning.

About half of providers had said that they had talked to their vendors or
software developers about the transition, but the other half had really not
begun — said they had not been prepared for Version 5010.

Overall when it came self-reported preparedness it was highest among vendors
and as we seem to see here, lowest among providers. This wasn’t entirely
unexpected since the vendors are certainly closer to the Version 5010
transition and need to be more prepared in updating their systems.

This is just a graph of some of those results. And one of take aways from
this really is the provider level of awareness and preparedness. And again this
is self-reported and even with it being a self-reported level they are fairly
low and really focus for us on the need to make sure that we are providing
additional tools and resources to help providers prepare and transition.

When it came to reporting concerns and barriers to the transition, everyone
seemed to be concerned about providers including the providers. The vendors did
say that both the payers and providers — they were concerned about their
ability to transition on deadline. Certainly the payers also mentioned the
providers’ learning curve. Providers seemed to focus more on the time and the
cost associated with learning the new codes and preparing for the transition.

Then the second tool that we had used was, as I said, partner readiness
assessment. We worked with five different industry organizations that were very
helpful in fielding the survey to their members. The survey basically followed
the same format as the questions in the IDIs that we conducted. Again, the
important point to note here is that this was fielded to all members within the
organization. It is less reflected of these organizations and their
preparedness, but rather whatever the parent company organization were for each
of the members. And we worked with AHIP, AAPC, ACP, AMA, and HBMA to field the
survey. We had about 440 respondents across the five organizations.

As I said, the questions mirrored those in the IDIs focusing both on general
awareness as well as specific knowledge of the transitions and deadlines. We
asked about what specific steps the organizations were taking to prepare to
really try and get from what people felt they were going to be doing to what
they actually were going to be doing, but what they had prepared to do. And
then also again as with the interviews the expectations about meeting the
deadlines. And really, as I said, the goal here was to drill down to the level
of the — of each of these organizations.

Our results did corroborate the in-depth interview findings that vendors and
payers seem to be more aware and prepared than providers for the transitions.
Again, lack of staff and time were cited as top barriers for these
organizations if they felt they were not going to meet the transitions. And
again respondents seemed to have a limited knowledge about when their
organizations would take specific steps and it is hard to tell from the format
of the survey if this is indicative of the organizations not being prepared or
just the fact that their communications within the organization was not
reaching down to the members as the level of preparedness.

I am not going to go into all of these details here, but these are the raw
data from each of these surveys. You see the sample size of respondents, since
this was a voluntary study, were varied from organization to organization. The
margin of error varies from each, but basically the questions focused on
awareness of the transitions, perception of the actions that the organization
has taken to prepare, and the level of readiness both for Version 5010 and for
ICD-10.

These were the top barriers that were cited as the note says at the very
bottom by those who said they thought they were not — the organizations were
not going to be prepared or they were not sure if the organizations would be
prepared for the transitions. Again, lack of staff and time cited very
frequently, budget barriers, and interestingly other competing transitions. We
know that there are obviously a lot of changes of coming in right now within
health information technology, elements of the HITECH Act and this was cited as
one of the competing initiatives to ICD-10. That was more of a concern for
Version 5010 and ICD-10. This may be indicative of the fact that Version 5010
is coming before ICD-10. It is obviously six months away.

The lack of impact analyses was more of a concern for ICD-10 and Version
5010. I am not quite certain what that means at this point, but certainly
organizations were concerned that they or members were concerned that
organizations were not looking what the impact was going to be if — transition
in time.

Again, I am providing some of the broad data here to give you a sense of how
members of each of these organizations ranked to the various concerns on a
relative scale. One being barriers that they felt were of most concern.

Finally, in terms of our assessments I wanted to give you a brief overview
of what we are going to be planning for our large-scale survey. Again, this
will be contingent upon OMB clearance which we expect to receive soon this
summer. It will be a large-scale study targeted towards 600 participants
skewing more toward providers than payers and vendors using the same questions
that were used in our partner assessment and in-depth interviews and again will
be fielded this summer. The objective here was being to have a large-scale
quantitative study to really get a sense of what the level of awareness is to
prepare in software transition.

In my last slides I just want to give a brief overview of what we have been
doing to date on outreach efforts with CMS. We have focused on as many elements
that we can to reach our target audiences from paid advertising which we were
earning over about the last year earned media which for those who are
unfamiliar with the term is really working with reporters to talk to them about
the importance of the transition, mostly trade reporters and hopefully cover
those stories.

We have an industry listserv which we run about two messages a month right
now with over 30,000 subscribers. We have been to conferences. And a very
important part of what we have been doing has been working with stakeholders.
Again, many of the organizations that are in this room have been very accepting
to working with us at CMS to get the word out to the members. The resources
that these organizations had when we started working with them two years ago
varied. They have really taken up the banner and created elements to their
website that — facing focusing on ICD-10, linking to CMS resources, and
working with us. One of the things that we did recently was what we called the
code-a-thon with AAPC in which we basically did a two-hour question and answer
session with anyone who wanted to call in. We had about 1300 participants. It
filled up about eight hours it took us to fill in the registration for that. We
were very pleased at the response to that.

My final slide is about our outreach to small providers and medical
practices because this is an area of concern since these organizations don’t
tend to have the resources that larger industry groups have. We have been
preparing materials to reach out to them. Targeted materials — I show two fact
sheets here that we have available on the CMS website. We have an
implementation timeline that we are going to be launching very shortly to help
providers get a sense of what they should be doing and when and whether or not
they are behind the curve and what they need to catch up.

We are working with Noblis who is developing a provider invitation handbook
and we will be helping to push that to providers and trying to reach out to
them where we feel that is easiest to capture them. It has been — conferences
like the National Rural Health Association conference held in May. Ads in rural
and regional outlets, not just national trade publications, but we have
actually been advertising each of the state medical publications as well, to
meet those small providers and individual presentations at regional meetings.

And that concludes my presentation. Thank you.

DR. WARREN: Thank you for the outreach. That certainly exceeds I think what
we had at our recommendations for the letter so we really appreciate that.

Okay. Questions from the committee.

Agenda Item: Questions by the Subcommittee

DR. SCANLON: I want to ask Chris a little bit more about the provider side
of this. I guess the question is you said in your telephone interviews that you
were screening to make sure you were talking to people that were in some
respects informed. In your survey — your online survey when we are talking
about the physicians, what are the kinds of people that might be responding
there because I guess there is this question of who knows about what is going
on and we have 800,000 physicians out there. There is this question of who
knows. And then on top of that I guess there is a sense of their readiness is
partially their own personal readiness as well versus their ability to hire
someone, organization potentially to do this for them so that they don’t have
to be as personally ready as someone else. I am wondering if you could talk
about that since those numbers were the lowest.

MR. HANDLER: To answer your first question it is hard to tell who is
responding in the surveys. The provider groups that we worked with were AMA and
ACP, but the survey was basically open to their members. Whoever wanted to
respond was able to respond. We could potentially get providers who were in
larger hospitals or larger practices that might be very well prepared or
smaller providers or rural providers who were not and don’t have the means or
were concerned about the means to transition. It is hard to tell with that.

And one reason we work to field that survey was because we were waiting for
and are still waiting for OMB clearance and do a larger more statistically
relevant study and in the interim we want to try to engage what potential
feedback we could get. We thought that was a good solution, but again it is
hard to tell exactly who responds. There is no way for us to really control for
who was receiving that.

DR. SCANLON: In your larger study were you — in some ways — collect
demographic information, basic information about who is the respondent is not
the true demographics, but sort of more about the context that you could decide
sort of what share of the world that they might represent.

MR. HANDLER: We work with a vendor who will field the survey and can field
it in situations that they do target towards specific demographics or to make
sure that where we have a representation especially for the large sample size
of 400 which is our target so that we are making sure that we do have providers
across the entire spectrum. And based upon how we develop the initial screening
questionnaire because typically there are questions that people will answer
that don’t target to identify them personally, but give some demographic
information. We would then be able to cut the data in ways that allow us to say
well based upon these overall results are larger providers or — providers more
prepared than those smaller providers and what are the various barriers that
they are seeing.

We are really with those — questions and work very closely with OESS to
make sure that we were asking questions that were less subjective. That while
we were asking what do you think your level of preparedness is we would then
start to drill down well what have you done so that somebody couldn’t say well
I am prepared and I am going to be able to transition and then find out that
they hadn’t budgeted anything for it.

DR. FITZMAURICE: First of all let me say that I am impressed with NCHS, with
VA, with CMS, with the preparation that you have done, the systematic process
that you have gone through, and the focus on the end dates and the results
desired. It is almost a textbook in how you approach a large problem.

I have some very small questions, one of them for Ruth-Ann Phelps. You
mentioned in your testimony in reality given the current status of the
implementation industry-wide the likelihood that all transactions will be
transitioned to 5010 by January 1, 2012 is improbable. Were you speaking in
general at your opinion about the industry or were you speaking specifically
about VA’s ability to make the target?

MS. PHELPS: I was really speaking in general, but I have some concerns about
us as well. Our biggest concern is payer testing, the end-to-end process. And I
think there is so much of that that we really can’t identify until it actually
happens. That is really the context in which I was saying and given that we are
large we started early. We have more resources to bring to bear on this than
some of the smaller providers. We are probably in a better position than a lot
of the smaller providers. And even so I don’t feel 100 percent confident.

DR. FITZMAURICE: Fair enough. Janice Chase with Indian Health Service.
Vendor readiness is a concern and I am sure it is not just a concern with
Indian Health Service. Are there any signals that the Indian Health Service has
put out to guide IHS vendors telling them that we plan to let contracts for
5010 or ICD-10 readiness that you can count on some additional revenue from us
to be ready or that we are going to have a competition and if you are not
ready, we will likely choose somebody else? Janice, are you still on the phone?

DR. CHASE: Yes, I am. Can you not hear me?

DR. FITZMAURICE: Now I can hear you. I was asking a question. Has Indian
Health Service put out any signals to guide your vendors that there will be
additional revenue, additional contracts to be led as a result of 5010 and
ICD-10 or that you have a competition and those who don’t qualify may not be
chosen for the future?

DR. CHASE: We really haven’t gotten to that level of detail to be honest
with you. We have been really working on the meaningful use and some of the
reporting that our facilities are going to need to get the incentive. We are
just now starting to reach out to the vendor committee. As a matter of fact,
that started last month. And the national group subcommittee for revenue cycles
they are actually addressing that in a subcommittee this afternoon. We are
having one of our first meetings.

DR. FITZMAURICE: Thank you, Janice. Elizabeth Reed, I don’t have a question
for you because I don’t know what question to ask that would shed more light on
the states’ problems. The states have problems with revenue, with different
systems, 50 different systems or more systems and so it is hard to change one
system within that morass. I just express some sympathy for the states that
they will get there and some encouragement.

Finally, Chris Handler. I guess it is kind of Bill’s question too. I was
amazed by the wide variance among the partner readiness assessment result just
the awareness. But as you said, we are not certain who responded to that. It
may or may not be indicative. Thank you.

MS. PHELPS: I would like to add one comment. I just want to clarify that for
the VA we will be flipping the switch to 5010 on the date. What I am not sure
about is that I am afraid there may be some things that will blow up. That is
my concern. It is not that we are not going to flip the switch. We will flip
the switch. We are totally committed to that that we will be on target. But
what will happen after that I am not sure.

DR. SUAREZ: If last night reflects anything, there are a lot of things that
can blow up when power outages happen. At home I got actually a power outage
and my electronic systems went off.

I have a lot of questions and I am really going to concentrate on three.
Probably do some of those questions offline too. The first one is a comment
really, but also an emphasis on some of the points. It is clear now that we are
in testing mode. A strong message to any entity that is out there that hasn’t
started remediation or hasn’t done a lot of the preparatory work is you need to
now think of contingencies because we are clearly at a point where it is only
six months away so testing.

But I am concerned actually that testing is not happening as much as it
should or it needs to. One of my thoughts was perhaps we need not just a single
day of a testing day, but a whole month or some whole week of testing that
really ramps up into a lot more people trying to do testing. At some point
actually we need to begin to think about incorporating into the recommendations
to the secretary the fact that testing has to be included. We already kind of
lined out that and by virtue of this time around saying the 2011 year will be
used as a testing stage.

It sounds like contingency planning is another element that needs to happen
now and organizations need to begin to think about what they are going to do
with respect to January 1 for contingency. There might be some need for
guidance about examples and ways in which there needs to be some contingency
handling.

My quick questions are for Chris Stahlecker. And emphasizing the importance
of testing of course. It was interesting that you highlighted during your
testimony some of the examples of things that were identified during the
testing process and some of the solutions. But my question was in introducing
or in making those solutions or making those solutions happen to what extent
the actual standard or the implementation specification guide needs to be
adjusted or is there something that happens outside of the standards
implementation guide because we are now dealing with a set of documents that
are standardized. We did have an emergency Errata kind of a process, but it
happened. But without much more testing there might in January or February as
people begin to implement is a lot more issues that need to be fixed that might
be directly related to the implementation and the standards so where those are
actually handled.

MS. STAHLECKER: That is a great observation of the illustration we tried to
point out. Actually the solution could be any of those approaches in Errata.
The solution that was discussed at X12 just last week to this very problem was
that a request for information should be issued by the entity that discovered
the problem and in the documentation from X12 on the resolution of that problem
that would constitute a formal equivalent of a TR3 update or an implementation
guide correction or set the stage for the next version of HIPAA standards to
incorporate that language in the upcoming release.

It is the emergency approach, if you will, is to use the RFI, request for
information Q&A. The industry would enter an RFI question back to the
standards development organization and as they resolve the issue, they would
document that. It is a modification to the standard in that one last example
that we have to the standard TR3. That is a change to the TR3, but it will be
expressed as the response in the RFI. That will be sufficient documentation for
the vendors to modify the products because right now their product matches the
TR3. This is a change. It is an effective change to the TR3. That is the way
that approach has been laid out for us to follow in X12.

DR. SUAREZ: One last question if I may to Elizabeth, a very quick one. For
Medicaid agencies, very impressive work that you have done and analyzing and
gathering that information and supporting. It is just amazing they want to
support it, provide it. What is the deadline for Medicaid agencies to submit
contingency plans on either 5010 or more importantly ICD-10 since there are so
many states that are medium to high risk of non–

MS. REED: We don’t have a contingency plan date set for ICD-10. As for 5010,
we would have liked to have it yesterday. As I have mentioned, we did receive
two contingency plans from two of the four states that are reporting that they
will not make the compliant state. Our goal is just to keep following up with
them. Hopefully we will know within the next couple of weeks and so that we can
assist them with their remediation process.

DR. SUAREZ: There is no set defined required —

MS. REED: Right. There is no set defined data. No. Not at this time.

DR. WARREN: I have one question and then it will be Justine and Raj and then
we will end questions. And this is for Kelley. In part of your testimony on
ICD-10 you said that you were already identifying reduction in cost as a use of
ICD-10. Could you give us a little bit more? What I am looking for is what was
your strategy to identify the reduced cost?

MS. COLEMAN: Our ICD-10 program manager has been working within the IPT
resources to determine how the payment cycle would be affected and he has done
some research. I don’t have the details unfortunately to provide a specific
answer, but I know that there has been some work in there and he did ask that I
express that in this testimony.

DR. WARREN: The reason I am asking is that may be very important as we do
further outreach to help people identify where their cost savings are to show
them that. We may contact you later to get more detail on that.

DR. CARR: This is for Donna. We have the GEM crosswalk which is just to be
able to look back at our data once we are in ICD-10, but it seems to me that I
have been seeing advertisements or hearing about vendors that are also putting
crosswalks out there for prospective use. Is that possible?

DR. PICKETT: Almost anything is possible. I really can’t speak to that,
Justine, because while I have heard the same thing, I have had no information
on what those products are, what their starting point is or was.

DR. CARR: I am pretty sure I have heard some of them. It raises the concern
of — whether it is introducing some bias in data that you will ultimately get
because a particular vendor has elected one crosswalk of codes and another
vendor another. It might be worth finding out what is going on.

DR. CHANDERRAJ: I have a couple of questions — you didn’t speak what I was
wondering because of the cost of the providers, were meaningful use. CMS has
come out with $40,000 for implementing meaningful use of EHRs. Because of the
cost — ICD-10. Is there anything in CMS to offer an incentive to physicians to
implement this because I think come October 30 it will be a disaster because
most physicians don’t have the money to do this.

The other question I had for GEMs — is GEMs a software product that is
available in a disc or what is it?

DR. PICKETT: There are files on the website of both CDC and CMS website.
They can be uploaded into other software, other applications. Rhonda, if you
are still on the phone, would you like to provide a little bit more information
please?

MS. BUTLER: Sure. The GEMs are text files. They are not software. They are
content. Since they are provided by federal agencies, federal agencies
typically provide content and then vendors produce products. Federal agencies
don’t compete with private industry. If you want me to provide a little more
information, this is just basically my opinion of what is out in industry
regarding products.

The previous questioner asked about perspectives mapping products. I too
have heard that vendors are producing those. And they claim to be able to use
clinical rules and/or organization’s own reference data to try and narrow down
the likely or plausible choices when you are converting records. I do not know
how well they work. Some even claim to be able to use natural language
processing capabilities, but I have no idea if they are any good.

DR. WARREN: I think what we were hearing both from Raj and from Justine is a
need to really do some extended outreach education actually to providers both
of physician practices and health care organizations to help them get clarity
on what is a GEM, what is crosswalk, and how to wisely choose. We will do that.
Any other questions? We are getting close to time.

DR. CHANDERRAJ: The thing about GEMs is — are the crosswalks going to work
becuase for angioplasty there are 1014 codes in ICD-10 whereas in ICD-9 has
only one code. I don’t know how the crosswalk —

For Chris Handler — I think traditionally had a proprietary thing in ICD-9
codes and you had to pay royalty when you get an ICD-9 disc to AMA for having
that.

DR. WARREN: You may have to pay a royalty or a low — if you buy it through
a third-party provider that is providing other services. Again, I think this is
an area. What I am going to do is ask you to take it off line and talk with
Donna about that during the break. We are going to take break. If people can be
back here — we have 10:15. If you can be back at 10:25 then we will try to
make up.

(Break)

Agenda Item: Session II – Health Plans, Clearinghouses
and Vendors

DR. WARREN: We are starting our second panel which is looking at health
plans, clearinghouses, and vendors. Again, remember each of you have 10 minutes
and watch Lorraine for the stars that have your count down on it.

Our first panelist is Tom Wilder from AHIP.

Agenda Item: AHIP, Tom Wilder

MR. WILDER: Thank you and good morning. I am Tom Wilder with America’s
Health Insurance Plans. On behalf of AHIP and our members I want to thank you
for the opportunity to testify today about how our members are doing with
respect to implementation and the revised HIPAA standards and the ICD-10 code
sets. As you know, AHIP is a trade association. We represent about 1300 health
insurers and collectively our members provide coverage over 200 million
Americans.

My testimony today is based on interviews and discussions with a broad cross
section of our members as well as the results of a survey that we conducted
last fall on the cost of ICD-10 implementation. I want to talk to you about
where our members are in terms of implementation and then identify some risk
areas and some concerns that they are sharing with us.

With respect to the immediate implementation of the revised transaction
standards our members are indicating that they are pretty far along. They do
expect to be ready by the implementation date and they expect that their
trading partners, clearinghouses, and provider systems are also on a pretty
good transition path. All plans have completed level one testing and they
expect to have the level two testing with their external trading partners
completed by the second or third quarter of this year.

One of the things they identified is actually pushing the testing off to the
third quarter was the 5010 Errata and so a number of the plans and their
trading partners are waiting until that is fully incorporated into their
systems before they conduct a complete end-to-end testing.

With respect to ICD-10 plans are reporting that mid-size to large plans have
basically completed their gap analysis and their assessment of what will be
needed. They have identified the resources although they may not have fully
allocated those resources. The small-sized plans are still in the middle of the
analysis and assessment process and figuring out what the cost will be and what
the human and financial resources are those will be needed.

Briefly I just did want to touch on the use of the GEMs because I know that
is one of the questions you had. Plans are using the GEMs as kind of a starting
point for looking at the transition between 9 and 10 for a lot of internal
systems such as utilization review and medical management. They are taking the
GEMs and then making modifications to those crosswalks and other mapping
systems to fit particular needs, particular systems within the plan. As far as
transactions, they expect to be running dual systems. They of course will run a
9 system until the crossover date and then move everything over to their 10
system and have the ICD-9 system available on a contingency basis.

As you are all aware of course the adoption of the ICD-10 codes is a very
significant undertaking for the health plan and providers and others due to the
complexity of the codes and the fact that they are used throughout health plans
systems. As an aside, it is somewhat interesting and ironic that we are
actually going to a more complicated and complex coding system at a time when
we are actually moving in the opposite direction with respective payments. We
are moving to a more unified and simplified payment system that consolidates
codes into episode-based systems in an effort to reimburse for a continuum of
care. And in many cases we are finding that these payment systems really do not
necessarily need the granular level that you get with the ICD-10 codes.

And as we all know, adoption of the 10 codes is a big cost for plans and for
others. The survey, which we did, I included with my testimony today. We got
responses from 20 plans representing a pretty broad cross section. Their
estimates of the cost were laid out on a per member basis and it ranges from
$38 for small plans which are health plans with under a million members up to
$11 per member for large plans which are over five million members and across
the industry $12 per member.

Translating that across our membership we estimate that the cost will
probably be between $2 billion and $3 billion for health plans to implement
ICD-10. Anecdotally I am hearing from a number of our members that that is
probably on the low side in terms of the ultimate cost.

These costs of course are going on at the same time that plans are facing a
number of other compliance responsibilities particularly around the Afford Care
Act. There are a lot of system changes that have to be done to implement a
number of changes both before 2014 and after 2014 when some of the new things
like the state health insurance exchanges come online. Just again and this
anecdotally a plan told me the other day that just one of the requirements that
they have for mailing out a specific notice that is required by the Affordable
Care Act is going to cost them probably upwards to $2 million. There is a big
demand on resources not only with ICD-10, but with other things that they are
dealing with.

There is of course I think a concern — well, not so much a concern, but a
lot of questions around provider readiness. I think there is a fair level of
confidence with the larger hospital systems and the clearinghouses, but there
still remain a lot of questions about the smaller physician practices
particularly around ICD-10. For example, one of our members reported to me that
they exchanged transactions basically with 10 trading partners either hospital
systems or clearinghouses and they have a pretty good sense that the
clearinghouse is going to be ready, but they don’t have a good sense of the
providers and vendors and others that are feeding transactions into the
clearinghouses of where they are. That is really the uncertainty. We recognize
that providers have the same kinds of demands on resources that our members are
facing around things like high tech and implementation of electronic health
record and e-Prescribing systems.

And as was I think very well illustrated by the first panel, there are a lot
of concerns about Medicaid and about their ability to implement ICD-10 given
just lack of resources that they have.

The word for the panel this morning was blow up. I think folks ought to
expect there will be blow ups around both the HIPAA transaction standards and
the ICD-10. I don’t use that in a pejorative sense. You know things are going
to go wrong. I think one of the key take aways our members have expressed is
that folks need to have in place contingency plans and to have and to
communicate with your trading partners this is what happens when something goes
wrong. Here is how we are going to deal with it. Here is how we are going to
get it fixed.

The other take away that we are hearing from our members is that they are
thinking about this not only in terms of their trading partners, but also in
terms of their customers. They don’t want a situation where a patient is at a
pharmacy. They have their swipe card and they are ready to purchase a
prescribed medication and something falls apart not because of the consumer’s
fault, but just because somewhere in the transaction chain things aren’t going
smoothly.

They are starting to think about actually at the point of care how is that
particular situation going to be handled to make sure that the patient or the
customer does face any disruptions.

And then the final couple of take aways that I will just share with you are
some asks that we have from CMS. We would like to see CMS become a lot more
engaged in the process. They are doing a lot of good things and we compliment
them on the steps so far and particularly their work with Ketchum. We think
that they need to be a lot more involved particularly around ICD-10 and
involved in getting the regional offices involved and bringing stakeholders
together to talk about the changes.

We would also like to see more guidance from CMS around a number of issues.
There was I think a mention on the panel this morning about some guidance from
CMS on contingency planning, what that means, how you can lay those things out
and there are some other specific questions. Again, this is anecdotal and I
don’t want this to sound like this is in fact representative of the whole, but
one of our members did tell us that they feel like sometimes when they send
things into CMS it is like a black hole and they never feel like they are
getting questions answered or that if they have questions that they posed where
they have had answers, they would like to see a mechanism where that is
disseminated to a broader audience on a quicker basis so folks who have similar
problems.

And, again, CMS has worked very hard on this and they have been very willing
to work with us and to come in and talk to our groups and so I do want to
recognize that. But there is just a feeling that there are some other things
that can be done.

Again, I appreciate the opportunity to share some thoughts with you and look
forward to your questions.

DR. WARREN: Thank you very much. Our next speaker is Dennis Winkler from
Michigan Blue Cross Blue Shield.

Agenda Item: Michigan BCBS, Dennis Winkler

MR. WINKLER: Good morning. My name is Dennis Winkler. I am the director of
technical program management at Blue Cross Blue Shield of Michigan and
currently responsible for the ICD-10 program. Blue Cross Blue Shield of
Michigan is also appreciative of the opportunity to give its status on the
program.

What we are going to cover today in a very high level is what we are doing
at Michigan, how we are doing it, what we see as the primary risk in the
industry and I think it will be a repeat of everything we have heard earlier
today and then our overall internal timelines.

To give the right level of baseline Michigan used and has created two
primary guidelines, guiding principles that we have for our program and I think
that will set the stage for the discussion that we have today. One is that when
we go live, we intend to maintain the status quo. What that means is we do not
want to have an increased rejection rate of claims. We do not want to have an
increased payout. We do not want to have a lower payout. We don’t want to have
providers dumping the paper. Basically we want to go live and have — to be
like seamless so nothing actually happens at all. That is our goal. That is our
objective and that is our guideline.

And secondly, we want to be in a position to take advantage of the ICD-10
data as it starts becoming and establishing itself in the environment. It is
not going to happen overnight. We are probably early on going to get a lot of
other unspecified codes and over the course of time we are going to get better,
higher quality 10 data coming in. As it starts becoming available, we want to
be able to have it and take advantage of it.

And how that drives itself in our environment is we also are not — are
remediating our solution — we are remediating. We are not cross walking. In
fact, that is our team status is we don’t need no stinking cross walk. And it
does work. It helps get everyone focused. But actually what we have decided to
do is we are actually using a single field solution and we can do that because
in all essence there is only 40 — I think there is actually 42 physical
duplicates between ICD-9 and ICD-10 today. Those duplicates in today’s
environment are not used for primary payment from a payer’s standpoint. And the
nomenclature that has been established ensures that we will not have additional
duplicates over the course of time as new ICD-10s are introduced into the
environment. We are basically using that single field solution.

What that translates to or why we are using that solution is again the
fields, the content are primarily separate and distinct and that once the field
expansion is accommodate we basically can keep and maintain the status quo in
our infrastructure that is in place today. And for us it represents the lowest
total cost of ownership as we take in the full migration as we roll out ICD-10.
The implications are kind of interesting because this truly shows how this
becomes a business-driven initiative, not a technology-driven initiative.

I think everyone is aware what the annual update process that occurs for the
updates of ICD-9 codes today. We get about on average 500 codes and everybody
at Blue Cross Blue Shield of Michigan knows what they need to do. When those
new codes come in, everybody runs off. They do their thing and come October 1
it all comes back together seamlessly and we have the new set of codes in
effect and the old codes have been deactivated.

We are going to use with our single field solution we are going to use the
same annual update process that we have in place today for the initial
population 160,000 codes. You can just imagine we are taking a manually
intensive process that works this year for every year for 500 codes and we are
going to use that same process and apply 160,000 codes. Trust me. We have to
re-engineer that business process.

Secondly is that the technical changes are limited to field expansion and
specific programs that use ICD-10 codes today. We have an IT person’s dream. We
have a lot of technical changes so we have high volume that is low complexity
and therefore most of the work is really on the business side.

Going back to those guiding principles — is to maintain the status quo and
one of those maintaining the status quo is what is called financial neutrality,
claims payout. We do not expect nor want to pay more nor less on initial roll
out of ICD-10. And that breaks down into really two primary sets of payments
within a payer’s environment. There is the facility claims and then there is
the professional claims. On facility we use a third party to do our DRG
calculations and so we are relying on that company to have that capability in
place and then it is up to us to go through a testing process to ensure
financial neutrality. And we developed a three phase or a three-step process to
do that that we will actually begin executing that culminates with testing with
external constituents and we will talk about that in a second.

But on the professional claims this is where it is really a lot of work on
the inside and this is where we use the GEMs because we have to map the ICD-10
code GEMs to how we work today in our ICD-9 environment. And to preamble that
in our environment we do not pay or use specific ICD-9 codes. What we do is we
put our ICD-9 codes today in the buckets. Every ICD-9 code today exists in one
and only one primary bucket for payment and we use that to basically determine
is that a benefit that is payable. If we have maternity benefits, we have first
aid emergency payable, we have a lot of buckets and that is how we put the
ICD-9 codes up front. When the claim comes in we basically turn on, figure out
what bucket it belongs to and turn on flags. Once we get into our claims
environment, we are agnostic to the specific codes because we are looking at
the buckets. Now that is key as it relates to what we will be talking about in
a second.

Enter the GEMs. The GEMs as we have heard this morning is really a
many-to-many relationship. When you think in terms even of buckets, we still
have to figure out how we put the ICD-10s to buckets. A many-to-many
relationship even in buckets there will be these things that are identified as
discrepancies that we have to resolve. I will show that in a second.

The GEMs get us in the neighborhood. Again, it shows that many-to-many
relationship and that we have to apply that to our specific environment to be
able to get Blue Cross Blue Shield system to be able to apply the ICD-10s. And
we believe that this process that we are talking about, this mapping process is
something that every payer has to do and everyone has to do it unique because
every payer’s internal environment in and of itself is unique.

What are these discrepancies? We will just go real quickly as far as what
these are. US is having two buckets. We have medical emergency and we have
first aid. And in this case we have three ICD-9 codes in medical emergency and
when we use the GEMs, the GEMs say that these 9s so ICD-9 number one points to
ICD-10 A and B and then we take a look at A and A points back to 9 because
again the GEMs allow us to look forwards and backwards. If we look at ICD-10B
it is pointing back to ICD-9 two and three. In our environment they are all
pointing back to the same bucket. We are self-contained and it works. We are
good. We can accept the GEM mappings as is.

Now the fun one is when it occurs like this. Same scenario but we have this
little ICD-10B code that is not only pointing back to medical emergency, which
is good, but it is also pointing back to first aid. That is a discrepancy and
we have to take those each — identify each of those discrepancies and walk
that through to figure out what is the best association to make and that is the
bucket that we put it on and along the way we have to document this because it
is something that is going to ultimately come up that has to be why did you
make that decision so we have to really map those and keep all of our audit
trails.

To do that — just quickly. There are 160,000 of these codes half and half
between procedure and diagnostics. We have a lot of codes that we are looking
at. If we did this for all 80,000 diagnostic codes, we would spend an enormous
amount of time and it is a critical thing, but we really need to concentrate on
the high-priority codes. And so really we have basically done this
stratification as to which of the codes we primarily wanted to look at and go
through this discrepancy resolution process. To us a code is not a code is not
a code.

We take a look at the S9031XA, contusion of right foot, initial encounter.
That is probably something we need to look at and make sure we pay and which of
the buckets that we go to may take a little bit of time much more review versus
a lesser combination code of V91.07XA which is burn due to water skis on fire.
And these are real codes.

DR. WARREN: ICD-10 is fun. Just because of those last —

MR. WINKLER: There are some good ones out there. But again it boils down to
how we stratify and how we concentrate on the time.

From a risk standpoint, we feel that there are the key risks are overall
industry readiness. It really doesn’t matter if the payers aren’t ready or the
providers aren’t ready or the docs aren’t ready or the clearinghouses aren’t
ready. If we go bump in the night, the entire infrastructure is in turmoil and
that is going to cause all kinds of disruptions whether it is cash flow
impacts, the member-patient benefit relationships, the relationships between
all the constituents, it really doesn’t matter, the bottom line is if the
entire industry goes in turmoil.

As it relates to things that we have put in place within our spectrum is to
try to help mitigate those risks over the course of time and one is the
communications and outreach whether it is just through general communication,
face to face, various articles being written to the various associations is
that we are trying to get in front of our various constituents and multiple
dimensions to help to create awareness of what ICD-10 is and the impact on them
and what they need to start thinking about and doing in preparation for October
2013.

Similarly in the partnering we have identified a limited number of key
medical groups as well as the facility groups to begin working with together to
define what is financial neutrality collectively and work together to be able
to test from critical degree of standpoint their claims as they actually change
and look at specific situations, code their medical records in an ICD-10
environment, push those codes all the way through our environment from a
testing standpoint, generate the payment, have it go back and do the
reconciliation between both parties. We need to do that upfront because quite
frankly we can be compliant. We can be ready to go. But when those claims
starting coming in if we start kicking out rejections and people are surprised
on both sides of the equation then we haven’t done our job. This is really
critical from our standpoint even though it is a very different type process
that we have done historically.

The last thing is the planning for continuity of business operations. We
have talked about that being contingency planning. I have been suggested not to
use that because that has a negative connotation so we call it continuity
business operations. I am good with that. The bottom line is contingency
planning.

And the key here is there are multiple dimensions of contingency planning.
There are contingency plans that payers need to think about. There is
contingency planning that the providers and the facilities need to think about.
There are contingencies you need to think about that occur before go live and
then as we were hearing from the VA relative to post-go live, there are
contingencies you need to think about after you go live what you need to
consider and do. All of those things we are trying to get up a leg now and put
in place because we have — October 2013 seems a long far away, but it is
really not that far.

As we look to your high-level timeline, we are basically in the middle our
mapping process that we started. We started the mapping activity. In April we
plan on finishing that at the end of the year. In 2012 we are applying those
maps to our benefit streams and being in position to do our full testing cradle
to grave inside with all of our vendors. And then in 2013 that would leave us
the opportunity to basically go full testing with our constituents.

Now, if you add all of that up, it shows that you are about a year worth of
testing — year’s testing in total and the key is that with a firm end date if
any of these things start pushing back, if we are not ready, if our vendors
aren’t ready, if our external constituents, you are just creating a shorter and
shorter bucket of time to test and that is where the risk occurs and I think we
all have to deal with what that means collectively and collaboratively and
probably through meetings like this and others that we can actually work
together to hopefully pull this out realistically. Thank you.

DR. WARREN: Terrific. Our next speaker is Rich Cullen from Blue Cross Blue
Shield.

Agenda Item: BCBSA, Rich Cullen

MR. CULLEN: Thank you. My name is Rich Cullen. I am the executive director
of the national programs of the Blue Cross Blue Shield Association. The
association is a national federation of 39 independent Blue Cross and Blue
Shield companies that collectively provide healthcare coverage for nearly 98
million members. And like my fellow panelist I appreciate the opportunity to
provide our state of readiness for both 5010 and ICD-10 today and I will try to
address several of the topics for which the subcommittee expressed an interest
as well and really believe that our status report reflects both ours and our
member plan’s commitment to achieving full compliance on both 5010 and ICD-10
implementation dates.

In the interest of time I will provide a condensed version of the written
testimony that we previously provided the committee and I guess it is up to
Lorraine how condensed it actually is.

While the bulk of the work is out for the Blues is obviously going to be
done by our plans as you can see by what Dennis just walked through, but the
association is also facilitating implementation by actively engaging with other
industry stakeholders to try and promote that awareness and readiness along
with supporting educational programs and developing standard messages, working
with our Blue plans to develop and share best practices, participating in
pretty much all industry workgroups such as WEDI and HIMSS to really try and
move the industry towards a compliance, also providing access to information
and educational materials on our public website, responding in a timely way to
request for information from CMS, and there are systems that we the association
maintain and need to update that support our Blue inter-plan operations as well
as our Federal Employee Health Benefits Plan processing.

I will start with our 5010 readiness. All Blue plans will meet the January
2012 date for all transactions and also expect to be able to process both the
5010 and 4010A1 claim status and eligibility transactions in a dual mode
starting this July.

In addition, while plans will begin accepting 5010 transactions in limited
production obviously I think gather from a testimony earlier that we are not
expecting a high volume at that time and some of the implementation activities
will be condensed into third and fourth quarter. As most of the process change
and system development work has been completed, our Blue plans are not actively
engaged in testing both internally and externally.

We think collectively really believe there is a sense of urgency. It is
important for the 5010 requirements to be implemented on time. And really our
sense of urgency stems from two key factors. Obviously the need to be
compliant, but really the second one is the ability of plans to free up
resources to work on ICD-10, healthcare reform, and other strategic initiatives
that are on the plate as well.

From a risk perspective on 5010 I think similar to other panelists’ primary
risk management concerns regarding trading partner readiness and also having
sufficient time to complete testing with minimal to minimize
post-implementation issues. Our plans have indicated to us that the lack of
progress by trading partners, most notably the small provider community, and
that really poses the greatest risk to full implementation on January 2012.
Plans have also mentioned that the 5010 Errata changes, while relatively minor
in nature I think from our perspective, did have an impact on testing schedules
because vendors delayed delivery of product modifications, and trading partners
were reluctant to start testing until those product modifications and Errata
changes were made. Plans are trying to determine how to remain customer focused
and retain current provider productivity while obviously maintaining our
compliance.

On the testing front, our plans are in various stages of testing as I
mentioned both internally and externally. Most are first testing with their
high volume trading partners, such as clearinghouses and large volume providers
that submit directly then moving to lower volume partners. Having enough time
to test internally and externally is obviously a critical success factor in
terms of the quality and maintaining productivity. While plans can control
their internal test schedules, obviously the external test schedules must be
negotiated and coordinated carefully to avoid any last minute issues and allow
time to correct issues that are encountered during testing.

Let me switch gears to ICD-10. All of our Blue plans have initiated and are
actively engaged in their ICD-10 projects. Not surprisingly I think the most
notable observation to date is the breadth and depth of the work that will be
required to implement this and from a health plan perspective as probably
gathered from Dennis’ presentation really impacts every area of a health plan
operations.

Currently we have more than 90 percent of our plans have completed or nearly
completed their impact assessments. Ninety percent have also started process
design and development and also started system design and development. In
addition, plans are actively engaged in identifying and filling staffing
requirements and really determining the need for external support of these
projects as well.

Our plans have gained traction and are gaining momentum on ICD-10. I think
it is really critical for CMS and the industry to engage in aggressive provider
education and outreach to ensure we can see some provider momentum on the other
side as well.

From our impact assessments our plans’ approach has been to use both
internal and external resources from a translation strategies kind of fall into
three broad categories with plans implementing more than one strategy based on
their business needs.

These broad strategies are remediation where business processes and systems
are changed to use 9 or 10 codes starting in October 2013; a normalization
process where 10 codes received after October 2013 will be converted back to 9
for processing; or replacement where new systems are put in place that can
accommodate ICD-10 codes. And really the selection of the strategies is a
combination of factors based on business need, processes and frequently the age
of the systems that are trying to be addressed.

Here also similar to 5010 I think we have the same sense of urgency. We do
believe there is a value in the more granular information that can be obtained
from ICD-10 codes. But the expeditious implementation of ICD-10 is similar to
5010 essential to timely and efficient implementation of many of the other
administrative simplification provisions of the Reform Act including health
plan identifiers, claim attachments, EFT, and operating rules probably just to
name a few.

One quick comment on GEMs and probably reiterating again previous comments,
our plans definitely via the GEMs is a great starting point for mapping
activities as well, but obviously it is not the solution. It is a great tool,
but there is a lot of other analyses that needs to take place to make sure you
can remediate your systems. An ICD-10 front as well similar to 5010
communications is key provider outreach and training and we are actively
engaged on all those fronts as well.

I think that concludes my time. I appreciate the time.

DR. WARREN: Our next speaker is on the phone. Debbie Meisner, are you there?

Agenda Item: Emdeon, Debbie Meisner

MS. MEISNER: Yes, I am.

DR. WARREN: From Emdeon. Go ahead.

MS. MEISNER: Good morning. My name is Debbie Meisner and I serve as the vice
president of regulatory compliance strategies for Emdeon and we are pleased to
offer the following comments to the subcommittee regarding implementation of
5010 and ICD-10. Emdeon has been an early tester of the new transaction
standards. We hope that our experiences and observations will be helpful to you
as you assess the industry’s readiness to proceed with these critical
initiatives.

In an effort of time, I think most of you are aware of Emdeon so I will skip
the next bit of the written testimony. I only want to point out that we do 5
billion healthcare transactions each year and our network connects over 500,000
providers, 81,000 dentists, 60,000 pharmacies, 5000 hospitals and 1200
government and commercial payers giving us a really good sample of the entire
US commercial healthcare sector and a major portion of the US government sector
giving you a unique, 360-degree view of the impact of these changes.

Today, we would like to discuss our roadmap for implementing 5010 and D.0,
the results of our early testing efforts, and some important considerations for
the industry to take a look at as they go through their ICD-10 implementation.

Emdeon’s roadmap for 5010 follows a five-step path as probably everybody
that is testifying went through with analysis, engagement, design, remediation
and testing. In an effort for helping you guys with your time I am going to
skip to the testing portion of our project plan which is where we are right
now.

Emdeon was an early tester for 5010. We facilitated level 2 trading partner
testing ahead of the HHS January 1, 2011 guidance. Testing is currently
underway with both submitters and payers for the 837 professional,
institutional and dental claims, the 835 remittance advice, the 270/271
eligibility transactions, the 276/277 claims status and also for the NCPDP D.0.
We planned to do our 278 testing in the second quarter of this year.

By following the roadmap laid out for you and applying a disciplined
approach to testing, Emdeon has learned a great deal about the impact of 5010
and D.0. Today we would like to share with you what we have learned and offer
some suggestions for mitigating the challenges that stakeholders are likely to
face during the implementation process.

I would also like to add that Emdeon’s did participate in the CMS National
Testing Day on Wednesday. We had already been testing with all of the MACs and
we are now in the process of gathering the responses and making any required
adjustments on our side and we will be developing a report card.

Our focus remains to continue testing looking to understand as quickly as
possible the behavior of each of the MACs and identify any differences to
assist both of us. We also want to work with the MACs as aggressively as
possible to get all important issues on either side identified and corrected in
time for the August test date coming up.

Emdeon’s 5010 testing efforts shed light on a number of issues that could be
avoided with proper preparation and planning. Here is just a brief overview of
some of the observations as a clearinghouse regarding the impact on providers,
health plans and software vendors.

For providers, it is critical to understand the impact of the 5010
enhancements and to update business processes and procedures accordingly.
Making these changes early will allow providers to begin collecting and
entering incremental 5010 content leading up to the compliance deadline. In
addition, we recommend that providers begins requesting 5010 updates from their
software vendors early and often and proceed with installing, training and
utilizing the updates with their EDI trading partners.

For health plans, our experience tells us that it is vital for the plans to
understand that many providers will not be able to send full 5010 content,
especially during the transition period leading up to the compliance date.
During the transition period and possibly beyond, health plans that use
translator products to translate inbound 5010 transactions into formats used by
the adjudication system may need to relax or reconfigure some translators to
prevent claims from rejecting due to missing 5010 content.

If health plans set their translator products to reject transactions that do
not meet all 5010 content standards, but the transactions contain all necessary
content for claim adjudication and payment within the health plan’s business
processes, Emdeon is concerned that EDI penetration rates may fall as small
providers revert to paper, health plans may run afoul of state prompt payment
regulations, and provider payment and therefore cash flow may suffer.

Software vendors are strongly encouraged to complete and test 5010 product
updates early in order to allow time to deploy and train their provider
customer base. We are seeing a significant learning curve for 5010, so it will
take time for billing clerks and other office staff to learn and understand the
changes. Along similar lines, we recommend that vendors include 5010 updates
for all transaction types in their initial deployment to avoid having to repeat
the full release cycle and staff training transaction by transaction.

In addition to the broader observations above, a number of very specific
issues emerged during testing that I would like to share with you. Around the
billing provider address, the address on the claim can no longer be a post
office box, yet we continue to see extensive use of the PO Box in current claim
volume. There could be several explanations including the fact that it may be
difficult for providers to change the address in desktop software tables or
providers may be wary of changing the address for fear that it might result in
rejections of the claim for provider enrollment. Thus, it is important for
providers to contact their payers proactively regarding updating the address
information to avoid any adverse affect on enrollment.

This is also true of the zip code which must be nine digits for the billing
provider or service facility. Once again, it may be difficult for the providers
to make this change in their desktop software tables. To address this problem,
a clearinghouse could, at the trading partner’s request, default to 9998 in the
final four digits during the transition.

For the release of information under 5010, there were some codes deleted
that do not specify consent to release information. During testing, we found
that providers continue to submit claims with values that indicate lack of
consent and it is important to continue to educate the providers not to submit
claims if they do not have the consent.

The other problematic data content that we are facing is the designation of
the assignment in 5010 and it now represents the providers’ relationship with
the health plan where in the past it was restricted to Medicare only. In
addition, what we are seeing is that the value of P which was removed meaning
patient refuses to assign benefits which had no valid business reasons for this
particular data element; however, we are seeing that there is still a lot of
submitters using that value. We continue to educate our providers that they
must no longer use the P and should assign the value based on their arrangement
with the destination health plan.

Now, I would like to come back to a point I raised earlier in my testimony.
As an industry, it is extremely important that we recognize and plan for the
fact that there will be a period of transition as we move towards 5010
readiness and compliance. During this period, providers will need to learn new
rules for capturing data content. While this learning period is taking place,
we recommend that providers and their vendors should work toward compliance,
but at the same time clearinghouses and health plans should process
transactions based on business processes and applicable regulations, not strict
enforcement of content that is not required as part of their business process.

In fact, the 5010 TR3 makes specific reference to this approach in Section
2.2.1.1 and it looks at transaction compliance in the context industry usage.
In this section, the guide specifically states that when evaluating a
transmitted transaction for compliance with industry usage, the guidelines are
not intended to require or imply that the receiver must reject the
non-compliant transactions. The receiver will handle the non-compliant
transactions based on its businesses processes and any applicable regulations.

As we work through the transition to 5010 compliance, we recommend that
steps be taken to avoid rejection of transactions based on overzealous reading
of the rules so that providers can make progress without impacting cash flow.
Again, the emphasis should be on progression vs. perfection. We strongly
encourage the subcommittee and others at CMS to consider how this concept might
be applied during the 5010 transition to minimize disruption for providers,
payers and ultimately for the patients.

Looking ahead to ICD-10 I would like to spend a little time offering some
observations from our early efforts to move our company and our customers to
the new codes sets that go into effect in 2013.

As we all understand, the ICD-9 code system is old and does not reflect
advances in medical knowledge or technology. ICD-10 is already in use in many
countries, and there is considerable pressure from the WHO for US to convert.
As our healthcare system continues to evolve, the current codes do no capture
data relating to factors other than disease affecting health. This gap in
information impacts quality reporting as new delivery models emerge. Increased
specificity could generate better data on procedure and diagnosis trends
resulting in improved patient care, as well as assisting with public health
threats like pandemics or bioterrorism.

To date, Emdeon has taken a series of important steps toward achieving
ICD-10 readiness. We have convened a group of critical stakeholders and
requested an initial impact assessment for each line of our business. We have
also conducted reviews of the various crosswalk products, and we are currently
assessing demand for crosswalks among our customer base and the ability for
crosswalks to properly translate on behalf of these customers. Again, our
customers represent all major sectors of the healthcare industry, so it is
critical that we invest in this due diligence process as we can offer solutions
to meet the varying needs within each of these sectors.

These early efforts have led us to draw four important conclusions about
ICD-10. It is big. ICD-10 implementation has far greater impact and is more
complex than any other HIPAA initiative. It is high impact. No one should
assume this is an IT project. It brings significant impacts to basic business
processes and operations. It is still unknown as an industry. We do not know
the full impact of the transition to ICD-10. And it is continuing to evolve. It
is very important that all of us stay involved in the process and work hard to
educate our own organizations and those of our partners.

In closing, we would like to thank the members of the subcommittee for their
time and attention. The changes being discussed today represent a major
transition for our industry and we appreciate all of the efforts that you bring
clarity and consensus to the process. We hope this information will be helpful
to you. Should you have any questions or need any further information, please
do not hesitate to let us know.

DR. WARREN: Thank you Debbie. Our next speaker is Lawrence Howe from
Ingenix.

Agenda Item: Ingenix, Lawrence Howe

MR. HOWE: Thank you. I would first like to thank the committee for including
me in this morning’s testimony and hearing. I am a senior director and national
ICD-10 practice lead for Optum Corporation. Formerly we were called Ingenix and
we part of the United Health Group portfolio of companies.

In the spirit of transparency I would like to share with you what we do. We
provide 5010 and ICD-10 compliance and remediation services to both the payer
and provider community. What I would like to share with you this morning is my
observations and some perspective surrounding about a handful of 5010 and
ICD-10 implementations and transitions that I have been involved with over the
last couple of years.

One of the first things that we have observed in the field is about 50 to 60
percent completion of impact assessments across both the payer and the provider
community. The payer segment is approximately six to seven months behind where
they should be. The provider segment is up to nine months behind where the
payers are. As we have heard this morning, we would like to suggest that the
provider community look at accelerating some of their initial efforts including
the impact assessment because it obviously feeds a lot of the activity going
forward.

Most of the folks that I have met with and support are in the process of
updating and remediating their systems as opposed to just doing a wholesale
forklift replacement probably for cost reasons although I think they are
probably going to discover in the not too distant future remediating the
systems will likely take longer than just replacing them.

Surprisingly, by way of some of the additional legislation that has come out
around implementing EHR and also moving to HIN they actually thought there are
people out there, entities out there that think that moving to an HIN is going
to solve their ICD-10 problem and it is not. They don’t realize they are still
back in systems that need to be addressed and carried forward.

Many are now evaluating the business implications side of the transition and
the roadmap activities as opposed to just treating this as an IT project. I
would submit to you that the business process implication will take
exponentially longer than the IT related system remediation and potential
upgrade aspects. As we heard from both Dennis and I think even Tom mentioned,
the process side of it is infinitely more complex than just the systems or IT
infrastructure related side as it relates to ICD-10.

I might draw your attention to the bullet there. Most are surprised at the
work effort involved and the costs. Surprised is probably a very politically
correct word these days when they realize that it is going to take them tens of
thousands of man hours and millions of dollars to become ICD-10 compliant. I
wanted to be sensitive to that word.

From an implementation strategy perspective, many of our clients are
finalizing the level of effort and have begun actually forming business process
taskforce internally to aggressively go after the process remediation and
improvement aspects that are going to be called for within an ICD-10
environment.

From an urgency perspective, unfortunately we are seeing the payers and
providers tackling both 5010 and ICD-10 concurrently which is not necessarily a
best practice, but sometimes you do what you have to do and obviously they have
to get through the 5010 compliance efforts first to have the runway into a
successful ICD-10 compliance.

We are a very big proponent of initiating the quantitative analysis and the
predictive modeling from a reimbursement perspective in an ICD-10 environment
earlier rather than later. Going back to my previous statement that both payer
and provider communities for the most part with the exception of maybe the
larger payers and of course the Blues which have a tendency to be more leading
edge and progressive than others the ability to able to predictively model what
the new reimbursement environment is going to look like is absolutely key to
payer, profitability, and sustainability going forward. You can’t do that
without demonstrating forward progress in an ICD-10 compliant environment which
implies you have to get through testing and all of your actuaries and the
respective lines of business and business unit leaders to begin looking at the
modeling that has to be undertaken to be looking at what those payouts are
going to look like in the future.

Focus on the codes and drive revenue and volume. A lot of our clients are
overwhelmed by the 144,000 codes that they potentially have to step up to. We
suggest that they just take the ones that have high volume, have high revenue
impact to the organization and focus on those first because a percentage of
those 144,000 may not apply to your entity anyway.

From a risk management and contingency planning perspective, I have touched
on the questionable provider readiness. Right now we believe there is risk in
the system that the providers are late to the alter to undertake even their
impact assessment. Secondly and maybe even more importantly, smaller providers
are even more at risk especially those in rural areas which I think just
roughly 35 states out of the 50.

Some of the impediments and challenges. The “assumptions” modeling
or that predictive modeling that I mentioned earlier is going to drive
financial or fiscal conservatism in the payers because there is going to be
impact likely to their risk score and other financial areas because you are not
going to be working from empirical data. You are going to be working from
assume data which resonates I am sure with all of the Blues and all of the
other payers in the room.

The impact from productivity dips. We anticipate there is going to be a
noticeable productivity dip across the board for up to the first 90 days
transitioning past October 1, 2013. We also think there is going to be a rise
in pended and rejected claims because since a lot of entities have started
late, they haven’t been able to work through all of the testing issues, but
more importantly all of the training issues.

And then moving into training right now what we are observing is most of the
training that has been done to date has been internal and more awareness
training. What really needs to be identified, defined, and even scheduled is
the clinician, the nurse, the precertification professionals, and the billing.
And I would also highly emphasize and I reiterate emphasize that the providers
need to be identified and monitored from a training perspective because it
starts with the provider experience in terms of both the physician, but also
others within the value chain from a provider perspective because it all starts
there.

My company is also in the process of actually updating our training
resources. We think there is going to be additional need around anatomical,
surgical, and even physiological training to support some of the additional
detailing granularity requirements in ICD-10 coding and reporting. And I will
also mention we think there is going to be a tremendous demand for
documentation training because of the increased granularity of ICD-10
reporting.

Testing status. I have touched on some of that. Most of my clients have not
even begun the external testing that is scheduled for August or the September
timeframe. ICD-10 testing won’t begin until 2012 unfortunately. We need to make
sure that everyone has identified: the trading partner, the delegated entity,
and of course the third-party billers from a testing perspective because some
of these have a tendency to not get picked up in the impact assessment
inventory and really looking at the GEMs. The GEMs are a great starting point,
but we are starting to see a rise of the development of proprietary crosswalks
per payer to begin moving towards that ICD-10 coding environment. We also like
to suggest that people look at mapping tools to automate the process because
there is going to be significant complexity not just from a one-to-one
perspective, from a one-to-many coding perspective that is going to obviously
impact reimbursement, auto-adjudication, and a variety of other cash flow
issues.

Kind of in summary, the path forward, the concerns that we see and address
on a daily basis. I have mentioned the revenue cycle disruption especially from
a payer perspective. There is going to be challenges to cash flow, to days
outstanding AR, to the need to add staff to address the ICD-10 impacted
environment in the process reengineering. Provider readiness is something that
must in my opinion be prioritized and actually we encourage our payer clients
to take the first step and reach out to their provider network and begin the
dialogue because really this is a connected health network going forward. It is
not going to be us versus them.

The clinical documentation impacts. ICD-10 is going to introduce terabytes
of data, new data that is going to be stored and used hopefully for your
advantage either payer or provider consistent with some of the mandates within
the increase coding granularity and the need to be able to massage that data to
your advantage we think is going to be a competitive advantage for both payer
and provider that also support the pay-for-performance environment.

The cost neutrality. I called it that because we are surprised still that
companies are asking us can you give us a business case and a return on
investment for becoming ICD-10 compliant. They say there really is knowing
short term other than maybe the cost offset for fines from CMS were not being
compliant. From a cost neutrality perspective don’t look at it that way. Look
at it as a way to improve your business operations and streamline your
administrative aspects and become more internally efficient.

From an operational performance perspective, we anticipate hits or
degradation to service levels whether it is in the call center, the claim
accuracy. The simple fact that entities are complying from a 5010 and ICD-10
perspective simultaneously there is increased stress which implies increased
lack of accuracy, if you will, in terms of getting the job done and claim
accuracy which is going to increase the amount of rejected claims.

Also, from an auto-adjudication perspective we ask our clients to calculate
what a 5 percent degradation and auto-adjudication rate would meet financially
to your organization because your auto-adjudication rate is likely going to dip
right as you go into October 1, 2013. Obviously there are financial impacts to
that. You may need to add administrative staff to accommodate the additional
process and efficiencies. And then really prepare and balance from a process,
people, and technology perspective.

With that, I would like to thank you for the time this morning and pass it
on.

DR. WARREN: Thank you. And on training don’t forget the academics that teach
the doctors, nurses, and — because they don’t know anything about this.

The next people are Don Oaks and Brent Antony from Tennessee Medicaid.

Agenda Item: Tennessee Medicaid, Don Oaks and Brent
Antony

MR. ANTONY: Thank you. Good morning. Again, we appreciate the opportunity to
present here this morning. My name is Brent Antony. I am the chief information
officer for the Bureau of TennCare which is Tennessee’s Medicaid program. With
me is Don Oaks who is our manager of EDI. I will apologize if I am a bit fuzzy
this morning. I started the day on the other side of the country on a flight
that was about two hours late leaving so a little bit off my game this morning.
Don will have to pick up for me if I stumble.

MR. OAKS: But the problem is, Brent, I didn’t get in until 3 this morning
myself.

(Laughter)

MR. ANTONY: Just a little bit of background on TennCare and the Tennessee
Medicaid program. We are a managed care program. What that means essentially is
that we have a number of contracted health plans and administrative service
organizations who help us administer the TennCare program for 5010 and ICD-10.
What that means is we have a number of committed partners who are helping us
through this, but setting aside the provider community what we have to do
there. It also means that we have to address this across a number of
organizations concurrently.

The TennCare program today serves 1.2 million Tennesseans. It is about one
in five Tennesseans. With the anticipated Medicaid expansion, we expect to grow
to about 1.5 million Tennesseans or one in four. We have about 12,000 enrolled
providers in the TennCare program.

Don and I will tag team so I will let Don touch on our status and some of
our observations from this process.

MR. OAKS: Thank you, Brent. Basically from a 5010 status standpoint we are
an internal testing with some minor coding corrections kind of the word for
debugging. Our companion guides have been posted for our trading partners to
look at, review, and give us some feedback on. We are anticipating making a
revision to some of those based upon some provider feedback in the next couple
of weeks.

Our external testing is scheduled to start July 7 and by external I mean end
to end. We actually have a front system where we pick things up, process,
return information back, and it is automated in the processing there so we
don’t have to have the human operator pick something up and handle. The
environment we are in presently we have to do some manual manipulation there to
pick a file up and get it processed.

Our production implementation plan date is October 28. You may look and go
wow. They are going to be early. Yes, we have a reason for being early. We are
actually transitioning from an ASCII-based translator to the Edifecs
translation product. And our ASCII-based license expires December 31, 2011
which means we have no fallbacks. In order to make sure that we have a
contingency plan for fallback we need to implement early to be able to
compensate if there is any kind of issues. We are not expecting any. That is my
job to make sure we don’t, but at the same time we want to make sure where we
are at.

As far as concerns, the biggest one is multiple conflicts, priorities. Our
systems issues as Brent alluded to is we have multiple contractors. We have to
not only make sure that things are remediated internally. We have to also test
with them to make sure that the remediation that we are seeing and observing is
also done in their systems.

Some content business rule changes are definitely going to be made by 5010.
The one thing that we have done and I heard the comment earlier trying to be
status quo. We are implementing a vanilla approach to 5010. That means that we
are not taking advantage of some of the new functionality that may exist within
5010.

We are just beginning our mandated external testing. Our provider readiness
is really unknown. Elizabeth asked the question earlier about testing on test
day. At this point in time we have stood up Edifecs grant manager for external
entities to use for testing purposes. And we have had two providers that have
taken advantage of that. One of them is our benefit manager and the other one
is the Department of Intellectually Disabled Individuals. We will have plenty
of mental health and clean teeth that are 5010 compliant.

As far as our ICD-10 status we are in gap analysis, a huge policy review
undertaking. Code remediation is actually going to start after 5010. We are
putting all of the field length expansions into the 5010 project.

Broad organizational impact has already been mentioned. Policy. Benefit
plans. Payment reporting methodologies. The considerations that have to be done
on longitudinal analysis and what are you doing with all of this backside
reporting and analytics that are required. How do you tie a 9 and 10 together?
I heard a statement made earlier that you are not using a crosswalk. Well, in
order to do backside analysis you are forced into doing something. GEMs product
is a good starting point.

As far as significant efforts required, we have to plan, remediate,
communicate, educate, and coordinate. Then I added review, revise, and repeat
because you are going to have to — once you plan remediate, communicate,
educate, you are going to do it all over again because we are learning as we
go.

Concerns. Conflicting projects and schedules. There are multiple federal
initiatives, multiple state initiatives. We have to consider all of those and
move forward. Conflicting priorities and objectives. Shortage of resources and
expertise. There is only a limited number of individuals that are actually
knowledge workers that are available and I think we are pushing now on the —

MR. ANTONY: I will pick up from here. One of the things we are observing is
in industry focus and others have alluded to it on sort of the technology
solution and what you have to do to deal with the code expansion and
administrative compliance really putting in the solution that can handle
ICD-10. But it would appear broadly across the industry folks are behind on the
substantive work of ICD-10 really understanding the policy and process impact
and really understanding the coding. Where we have a significant concern is on
can we communicate enough between now and then and really get the industry to
embrace ICD-10 holistically and really in terms of the data that will come out
of that.

Still some concern about inconsistency and approach. Have folks talking
about crosswalk solutions. Other folks talking about native solutions. As Don
mentioned, we have a number of contractors and players operating in our
environment. One of our challenges is to make sure that they take consistent
approaches to implementing ICD-10 if only for the backend reporting and being
able to know that what we are analyzing with ICD-10 is the same — it is apples
to apples across all those players.

I have heard folks talk about an anticipated data fog; a period of time
where we are really getting our arms around ICD-10. We do expect that to be
extended that we will deal with that for some period of time particularly with
smaller unsophisticated providers who are trying to embrace this much more
complex code set.

We also have a concern that there is an unmanageable level of concurrent
change. Don alluded to some of the conflicting priorities in the Medicaid realm
although I think this carries over into the commercial realm as well. There is
the Affordable Care Act and health insurance exchange, and health information
technology initiatives and so forth and all have dates somewhere in the
2013/2014 time range.

Just to summarize our current status. Don may kick me under the table for
saying this, but in some respects we have it easy on 5010 because we have a
relatively small number of partners. Our contractors, our health plans really
have to deal with the vast number of providers out in the community dealing
with the 5010 and ICD-10 translation. In general, in 5010 we believe the
industry is behind schedule on testing. However, we believe many will be ready
for the 2012 migration and do think there are risk mitigation options. We have
talked about translations and such and there are folks out in the market that
can help folks and there are options that we have for implementation that will
accommodate for the late comers.

On ICD-10, we do think that the 2013 implementation will be disruptive as
others have suggested. There will be delays in payment and we will see this
data fog. We do worry that other priority initiatives will be impacted and
particularly the Medicaid expansion and the health insurance exchange. Those
start to come in 2013 and 2014 are heavy lift for the Medicaid agencies. We are
juggling flaming balls and trying to keep as many of them in the air as
possible.

And I think where we struggle with engagement and really folks embracing
ICD-10 is just uncertain short-term benefit. Folks really haven’t yet got in
their heads how this — folks understand where the code set is limited and
where it doesn’t reflect a lot of the advances in medical technology, but they
really yet don’t understand how this is going to benefit them in the short
term.

In conclusion, I think our recommendation to the committee would be that we
need to consider the interaction between clinical terminologies and
vocabularies and ICD-10 as an administrative coding and classification system.
We have providers talking about particularly the interaction between SNOMED and
ICD-10 and what they do on the front end with respect to clinical data capture.
A lot of them are saying they would have preferred to do this in the order
where they were implementing SNOMED — and dealing with translation ICD-10 for
billing and other administrative processes.

I think we do need to continue on the HIT front recognizing the need for
robust clinical data capture at the point of care to support the coding and
classification on the back end. Obviously the ICD-10 code set is much more
complex and so the processes to support that on the front end and gather the
data that will support coding need to be there to support the initiative. We do
need to continue to support and leverage those HIT initiatives.

We really need to look at the sequencing of priorities and schedules. The
SNOMED, ICD-10 question is one. Frankly there are the non-interrelated ones
like health insurance exchange and the Medicaid expansion that we internally
really need to look at the sequencing and the priority and how we deal with
that.

The last bullet here I will say we are not coming in — change to date. But
we are saying folks are behind schedule. I think we need to look at the
schedule. There was sort of an optimal implementation plan and then I think
there was a revision of the optimal implementation plan that would get us from
here to there. I think we are probably in — where we need to look again
critically as others have suggested at the provider community and where they
are at the payer community and where they are and how do we get from here to
there and how do we deal with some of these conflicting priorities.

With that, I close my remarks. Again, thank you for allowing us the
opportunity to speak to you this morning.

DR. WARREN: Thank you. And I will always love juggling flaming balls. That
is on my quotes now.

Our last speaker is Linda McCardel from Michigan Medicaid.

Agenda Item: Michigan Medicaid, Linda McCardel

MS. MCCARDEL: Yes, thank you. I am Linda McCardel the senior analyst with
the Michigan Public Health Institute and I am the ICD-10 project coordinator
for the Michigan Medicaid program. Today I am presenting on behalf of Michigan
Medicaid and I thank the committee for the invitation to provide information on
our implementation of the HIPAA standards and code sets.

A little bit of background. Currently Michigan Medicaid has about 1.9
million beneficiaries and about 75 percent of them are enrolled in a risk-based
managed care program. The remainder is in fee for service. Michigan is also one
of the very few states that maintain its own Medicaid program. We do not have a
fiscal agent.

And to frame my comments a little bit, I would like you to keep several of
these events in mind which have happened in Michigan. Last year at the end of
the year — well, last fall the state offered an early retirement incentive
which started in October and ran through December. And many of the long-term
employees with historical knowledge retired during that timeframe. A few were
extended and now they too have been leaving with the last few to be done by the
end of June.

In January of this year, Michigan had a change in state administration. A
new Republican governor replaced the term-limited Democratic governor and along
with that, there was a turnover of all department heads and many key staff. The
retirements have created many vacancies which have in turn caused a lot of
movement in the Department of Community Health which houses the Medicaid
program.

We are operating at a reduced capacity as most of the vacancies have not
been filled and may not be due to budget constraints. In addition, it is like a
musical chair type thing because when you have these vacancies occur then
people who are already in some positions are then moved around and it is kind
of like stealing from Peter to pay Paul.

The state also implemented a new MMIS which is a Medicaid management
information system, the big computer system that runs everything that state
Medicaid programs do. We did that in September of 2009 and staff has been
heavily involved with preparing for certification of the system by CMS. Staff
worked over three months preparing the documentation required for the visit.
CMS was there for a week at the beginning of May. So to say the least state
Medicaid employees have been spread very thin.

In spite of this, we are well on our way to 5010 compliance. We are
currently conducting B2B, business to business or end-to-end testing on the
270/271, 276/277, and 837 transactions. Unfortunately, we don’t have anyone —
no trading partner willing to test 278s. We did participate in the National
Testing Day and we reached out to our trading partners to at least begin to
enroll and start their validator testing and we did have a little bit of a bump
in our activity with trading partner enrollment and phone calls to get more
information.

We have focused on the higher volume trading partners, the hospitals, the
large hospitals, provider practices and clearinghouses. The outreach has
included a dedicated website or traveling outreach team that holds face-to-face
meetings with providers, bulletins, email announcements, a recent postcard
effort that encouraged an additional 50 trading partners to enroll for testing.
Staff has also been doing one-to-one phone calls to encourage providers to
start the testing process which would be the transaction validation first and
then the B2B processes.

Michigan will not be implementing the 277CA due to the way that we process.
Providers will have to go to our provider portal where they can review their
claim status online or submit a 276 and receive a 277 response. One of our
outreach efforts is to alert providers that the current 277U were unsolicited
will no longer be available after January 1. They should be testing the 276/277
capability as part of their 5010 efforts. Unfortunately under 4010 we only have
five trading partners that have currently submitted 276 transaction. That
number is going to have to increase.

A key value to our outreach effort has been our collaboration with Blue
Cross Blue Shield of Michigan and the Michigan Association of Health Plans.
Combined, we cover about 75 to 80 percent of the covered lives in Michigan. We
use this process in 5010. It was very successful. We worked together
participating in face-to-face meetings across the state and providing webinars
to get information out there in a consistent manner. We are not implementing
5010 in the same way as Blue Cross. They are doing a staged implementation and
Medicaid is implementing everything on January 1. Along with the VA we hope
there will be no big blow up at that point. We are continuing the collaboration
and providers really appreciate the single coordinated effort that that has
produced.

We hear from some of our trading partners that they are ready to test and
they are enrolling to start their validation testing. However, submitting an
actual test file is another issue. We are not getting them in the volume we
would like. Our goal is to have over 80 percent of our trading partners
finished with testing by November, but we are very concerned given the low
response that we are getting. We are just starting to hear that trading
partners are experiencing delay and their vendor products and until their
vendors are producing the products for them they are unable then to provide the
test files that we need to continue on.

For our managed care partners we will provide them with outbound files, the
824 and the 820, in mid-July. By then they should be fully engaged in the test
process in giving us some good feedback.

We are concerned that the provider community seems to believe that the 5010
implementation is something that can be handled by their vendors. Many don’t
realize the business impacts that they need to be aware of. In fact, some don’t
know what 5010 means even at this late date. And last week one of our test team
members received a call from a trading partner who wanted to know how they
could look at the test that CMS was going to give them in the near future
because they wanted to be prepared for it. Mainly we are finding that the
attention of providers is focused elsewhere certainly on meaningful use and
electronic health record incentive program, and it is not on 5010 and ICD-10.

Regarding the D.0, the State’s Pharmacy Benefit Manager will begin
coordinated testing with pharmacy software vendors later this month with a
target completion date of July. They anticipate that interested pharmacy
providers will begin to submit the NCPDP claim format at point of sale in the
fall as early as October 2011. We have no reason to believe that they will not
be compliant on or before the date.

We are fully prepared to be compliant on January 1 and we would not be
prepared to handle a delay and hope that there will be no change in the period
for the 5010 implementation.

On ICD-10 we are also confident that we are going to meet the October 1
date. We have a good sense of urgency to get on with the implementation. We
have had struggles kicking it off. Last summer, project sponsors were named and
we began our initial planning meetings. In September, we engaged upper
management and a high level awareness plan. We followed up with presentation to
bureau directors, which are the next line down, ask to begin informing their
staff they would be contacted. We did a high level survey as a precursor to a
detailed impact assessment. We now know and have a good handle on what business
areas are impacted the most.

But then everything came to a halt. The resources were devoted to 5010 and
several other activities that I will mention. The retirements came in waves and
the management staff change. The MMIS certification took precedence. As a
result, we are starting over essentially. We had to step back and reconsider
governance. We are now engaged in a detailed impact assessment. Our strategy is
to implement native ICD-10 taking in the codes and adjudicating with ICD-10
codes. We are soon going to start redefining our medical policies and other
business processes using the GEMs as a starting point and we are going to track
future strategic opportunities as we go. We are planning to carry out tasks in
a parallel manner so we can catch up.

We know that this project will have a far heavier impact on clinical areas
and business processes than the IT side and require more resources than
originally estimated. In Michigan, we have a lot of other department areas that
interface with Medicaid program and they will have to be considered. The
funding is a concern. States receive federal match but we are very concerned
about the amount of federal matching funds that the state will have to come up
with. We hear that the estimated impact for other Medicaid programs is four to
five times their initial estimations.

One of the things that we have noted is that being a little behind we have
actually gained insight from others in the industry and may not make some of
the same mistakes.

Providers aren’t up to speed. We hear from them that physicians don’t think
ICD-10 will impact them. They will continue to practice medicine as they have
and they view ICD-10 as a vendor or a coding issue. We needed a coordinated
effort to get their attention and that needs to come from their peers and their
colleagues.

The other challenges and barriers that we face. There is a lot going on in
healthcare. Everybody has mentioned the other mandates, operating rules, health
plan certification, HIEs, interoperability, claims attachments. State Medicaid
programs as mentioned by Tennessee have a plethora of other initiatives. The
EHR incentive payments, the National Correct Coding Initiative, the new
eligibility systems, expanded eligibility health insurance exchanges, provider
enrollment and certification criteria, policies to not pay for preventable
health care acquired illnesses or injuries, recovery audit contractors, and
many other mandated policies and processes out of the Affordable Care Act. We
have many competing priorities, too many at once, too much to do in too short
of a time frame.

We want to do a good job and we want to be compliant, but states face
reduced resources both in terms of staff and funding. The current staff is
burned out. The same resources are being used on all these projects at the same
time in addition to things that the state legislature has mandated. These are
very large initiatives and with the changes in administration and staff
turnover and loss of historical knowledge, it is extremely challenging to
establish and maintain the vision and coordinated effort all of the projects
required.

What we would hope is that we continue with 5010 and ICD-10, but take a look
at what other initiatives can be put on hold and delayed. We believe there
needs to be prioritization of the major initiatives with thoughtful
consideration of resources both funding and staff that are going to be
required.

And, again, I thank the committee for the opportunity to provide comments.

DR. WARREN: Questions from the committee?

Agenda Item: Questions by the Subcommittee

DR. SUAREZ: Thank you. Well, this has been a terrific panel as much as it
has been an opportunity to highlight issues. I think it has been an important
educational opportunity for all of us to hear some of the more refined details
of issues. As I was taking my own notes, I was thinking these are the kind of
issues that we have to put together in some resource some place so that people
can know what to do with zip code, know what to do with business address when
things like that happen. I think it is an important opportunity.

I have a couple of very quick questions — one of the themes that I have
been hearing is this concept of we are going to go native with ICD-10. We are
not going to use crosswalks. I wondered if in the Blue Cross Association there
has been an assessment of how much all of the Blue Cross are going to go
actually to a native ICD-10 or whether there are some that are still going to
use some crosswalks and realizing that at some point as I was thinking of
Tennessee Medicaid reps mentioned we are still going to have to do something in
the back end because of longitudinal analysis and some mapping — mapping is a
good word maybe. But how much of the crosswalks are not going to be used by the
association members?

MR. CULLEN: I think when we started down ICD-10 path 5, 10 years ago, I
think the initial thinking was a crosswalk was the way to go — definitely as
our plans have gotten into their analysis and a little further along and
identifying those impacts, the vast majority are looking to go a little more
natively and being able to dual process either or in whatever is received. And
definitely all of our plans even if they are cross walking as a kind of interim
piece are planning to get to that place at some point soon.

DR. SUAREZ: Just another quick question and this is also for others. It
sounds like everybody is also saying clearly it is an important — focus on
those high volume, high cost priority codes. And I am sure everybody is
building their own list of those. I am sure there is also an opportunity to
share particularly with the provider community and with other health plans and
others. What are those high priority codes? Is there a resource that in your
sense would help to share that type of — you should really start focusing on
this type of priority code because those are the ones that everybody is going
to be dealing with. Is that something that will be valuable do you think for
the industry?

MR. CULLEN: — definitely interested in other panelists’ views. We have
definitely shared some of that within the Blues in our findings, but I think a
piece of that is you have to look at your own data. You have to do your own
analysis. The high impact codes for Medicare may be different than commercial.
There could be a core set on where to start, but I do think everyone needs to
do their own analysis and I do think everyone needs to reach out to their
partners to have those conversations.

DR. CHANDERRAJ: The first question is to Tennessee providers. I know you had
an urgency of switching over because of your database management structure or
whatever you needed to do. How well are your providers or networks? Are they in
certain urgent situation as well who can work with 5010?

MR. OAKS: I think the answer to that is no they are not as far as feeling
the urgency on that. I have heard comments from not only from the first panel,
but even members of this one that the provider communities as a whole I believe
are both behind on 5010 and significantly behind on ICD-10 as far as readiness
and awareness.

From a 5010 perspective the biggest thing that I have to be able to do is
make sure that whatever is sent into my managed care contractors that they can
convert from 4010 to 5010 or that they can take a 5010 and send me a 5010,
because many ways as Brent alluded, were isolated from the outside world
because of all of our contractors but at the same time we have to make sure
that we have remediation and that they do also and that there is commonality of
that remediation. That is part of the reason for the publication of our
companion guide with comments, as to what we were looking for in specific
coding categories and how we are expecting to receive various qualifiers.

DR. CHANDERRAJ: My other comment is basically a comment not a question. The
hub of the will of healthcare is the physician and the provider and the
patient. I think I have seen more emphasis being paid to all the health plans
and administrative part, and nobody is paying attention to the provider. As
Michigan presenter kind of ridiculed the provider in saying that it is like a
test that CMS is going to administer.

DR. WARREN: We are going to hear from providers later this afternoon. Bill,
and I need you to be quick, and Mike needs to be quick.

DR. SCANLON: I will defer to Bruce.

DR. COHEN: It struck me all the testimony we have heard this morning raised
concerns about different approaches for moving from ICD-9 to ICD-10. I wanted
to hear if their plans were planning to evaluate or coordinate or try to create
some systematic approaches so that we know that we are getting the same data.

MR. HOWE: I am not aware of any. I think it is a great opportunity almost
like birds of a feather type coordination across payer and provider —
challenges because every business is different especially every payer whether
you do a crosswalk or native. It is going to be slightly different but there
are some commonalities that could be repurposed and reused, especially if we
are behind where we need to be.

MR. OAKS: I was going to say one thing I heard Dennis say was that you
bucket things. Everybody doesn’t do a bucket in the same way. You look at one
thing and it is six-sided bucket or it is an octagon or it is a square bucket
or a square container. Depending on your view of how you look into that abyss
that you are putting things into I think that is going to have a very
significant impact on how you look at the overall objective there. And unless
somebody comes up with a universal crosswalk I don’t see commonality.

MR. WINKLER: We don’t have commonality today so ICD-10 at best you are going
to do is maintain the status quo at best.

MR. OAKS: At best and I don’t see that happening.

DR. TRUDEL: I think that some of the initiatives that are beginning to move
forward in terms of multi-payer databases and the ACA provision on providing,
for instance, Medicare data for qualifying entities are going to provide some
platforms that are new for people to look at data across plans and this may be
an unanticipated benefit from that.

DR. FITZMAURICE: Two questions. It seems that the key for 5010 compliance
and maybe for ICD-10 compliance seems to be getting promptly to the stage for
external testing with your clients, your partners, your payers, providers, and
their vendors, the billing services, and the clearinghouses.

Two questions. One is for Tom Wilder. You presented a good summary of
industry concerns and implementation priorities. I wonder do the health plans
have sufficient testing facilities with or access by the clearinghouses and the
billing services and providers to move the industry toward compliance for 5010.
Does AHIP give any guidance leadership or technical assistance that guides
toward working or working together?

MR. WILDER: I think the capacity is there to do the testing and have it done
in time for 5010. I must confess other than encouraging them to stick to the
testing schedule we have not provided anything beyond that. We did part with
Deloitte on an educational series to kind of walk them through what they needed
to do and where they needed to be as specific points.

DR. FITZMAURICE: For Debbie Meisner at Emdeon who is on the phone, I
believe. Are you still there, Debbie?

MS. MEISNER: Yes, I am.

DR. FITZMAURICE: Is Emdeon educating providers and assisting their ability
to become compliant about what additional information you need for them to
provide to turn an ICD-9 claim to an ICD-10 claim and do you plan to charge a
higher price to turn an ICD-9 claim into an ICD-10 claim, for example, or a
4010 into a 5010 maybe 20 cents a claim to 50 cents a claim if they don’t
become compliant and make your job easier?

MS. MESINER: At this point no. What we are doing right now is evaluating the
tools, reaching out to our customers to see what their needs are and then we
will make determinations from that. We are at the assessment phase of our
project and evaluating customer needs. We have not the discussion on costs or
how we would even go about doing this on a payer-by-payer basis.

DR. WARREN: Let Lorraine have the last question because it is kind of
important.

DR. DOO: This is actually for the states. I actually wanted to thank the
panel. I thought it was really interesting. This morning was too. We really
appreciate your time especially we know the delays in the flights. Thank you
for being so entertaining. However, I do have a question. I did not hear any
mention of the work going for the Medicaid subrogation standard, the NCPDP 3.0.
And I wonder if that is an issue for the states or it is so easy that it didn’t
bear mentioning.

MS. MCCARDEL: Well, in Michigan we have a pharmacy benefit manager and I
believe that that is one of their responsibilities. I can certainly get some
information on that for you.

MR. OAKS: For the state of Tennessee we are in the same situation. We have a
PBM that is contractually obligated to handle them.

DR. WARREN: That would be good for us to know if the other states are also
doing the same thing.

MR. HOWE: I have two state clients and they expect to be not 3.0 compliant,
but D.0 and then they are going to focus on ICD-10 with an eye towards 3.0.

DR. WARREN: Any plans for 3.0 or they are just not?

MR. HOWE: Likely. Yes.

DR. WARREN: With that I am going to adjourn us for lunch. We are a little
behind, but if we could possibly try to be back here by 1 o’clock and then we
will continue.

(Whereupon, at 12:10 pm, recessed for lunch.)


A F T E R N O O N S E S S I O N

SESSION III – Other entity types and industry
stakeholders

DR. WARREN: Our first speaker is Rhonda Buchholtz, from the American Academy
of Professional Coders. Rhonda, are you ready?

Agenda Item: American Academy of Professional Coders,
Rhonda Buchholtz

MS. BUCKHOLTZ: First, again, I would like to say thank you for allowing us
to participate in this. The AAPC is a member-driven organization that consists
of over a hundred thousand members nationwide. Our members come mainly from
provider outpatient settings, consisting of coders, billers, auditors,
consultants, educators and providers as well. AAPC has developed a
comprehensive, two-day implementation training geared toward the nuts and bolts
of ICD-10 outside of just the coding realm. This training goes over all
business areas in a practice or facility and includes tools and resources that
are designed to help them with the transition and implementation by ICD-10.

To date, AAPC has trained over 3500 people on ICD-10 implementation in the
boot camp approach that we’ve taken, in addition to providing on-site training
and consultation to facilities and health plans and providers’ offices as well.
As we have been out and working with the providers and developing our
curriculum, we’ve come to understand that one of the very large hurdles for
providers is going to be based on clinical documentation.

With the increased specificity that’s found in ICD-10, we have found, during
our ICD-10 documentation audit and the use of the real-world notes that we get
from across the United States that we used to develop our curriculum, that
about 40 percent of all of those notes either can’t be assigned a code in
ICD-10 or have to be defaulted to the unspecified code selection, based on the
documentation. This will cause problems for providers ongoing, once the code
sets are in use.

To that end, we’re able to use those documentation readiness audits and the
note as a good educational tool in providing education to the providers, in
meaningful ways, using their own documentation, to show them the impact in the
changes on ICD-10, and where they’re going to need to focus their learning as
well.

Another identified training need that we have found is the need for coders
and other users of the code set to have a brush-up or additional training on
anatomy and pathophysiology training; not because the body systems or the
anatomy are changing, but because ICD-10 code sets have a higher level of
clinical specificity. To that means, AAPC has developed an anatomy and
pathophysiology course that is actually geared toward the code sets, so that
coders will get a greater understanding of disease processes and how they
pertain to ICD-10 code set selection. With that knowledge, they can go back and
they can work with their providers on helping them choose the most appropriate
codes and take a look at their plan for documentation as well, to make sure
that they have enough information in there to be able to collaborate on it.

Now as we know, there’s going to be a period of time, with the transition to
ICD-10, that providers and others will have to maintain dual coding systems.
Issues with workloads, resources and contract limitations on timely filing will
cause revenue impacts to provider offices. Many providers have contracts with
health plans in place that only allow for 60 days for claims submission.

If a provider encounters technical issues or even suffers loss of
productivity, which we know is going to be an issue in the transition, and does
not have the resources available to follow through on all the claims, they
could suffer significant revenue impacts. It will be extremely important for
providers to work with the health plans they’re contracted with to see what
might be in store for them, either through contract renegotiation or health
plans’ written assurance that they will waive timely filing limits for
providers during a specified period during the transition. However, the burdens
of dual systems don’t end just with the transition period.

As we are aware, there are those that won’t have to make the transition to
ICD-10. Concerns over worker’s comp, auto claims and the transition could have
providers having to endure dual systems ongoing. Through our education and
outreach, we’ve been educating providers on working with any of the panels that
they sit on to see what transition efforts are being made. If those carriers
are not making the transition to ICD-10, providers will really need to evaluate
if it makes sense to continue with participation on that panel.

The administrative burden of reporting in dual systems ongoing may far
outweigh the financial benefits to the practice. Oftentimes, patients come in,
and at the time of the visit, it can’t be ascertained who the final liability
will rest on. I use myself as a good example; a couple of months ago I was
traveling for business and I slipped and fell in the parking lot of the hotel,
and had to have surgery in order to be able to get home.

Now for those of you guys sitting thinking through the process, my immediate
thing was great, who’s going to end up paying for this one? Is it the hotel, is
it worker’s comp because I’m travelling, or is it my personal? It took five
weeks for the final determination to come through.

During that five weeks, after having the surgeries, the therapies and all of
that, you can imagine how many claims were actually submitted to my personal
carrier, because that’s what we do by nature. If that happened after October 1
of 2012, all of those claims would not only have to be flipped to a new
carrier, but all of those claims could potentially have to be completely
recoded, and this would create a lot of administrative burdens to a provider
ongoing, with their revenue sources.

Now as we’ve heard today, with the use of the GEMS and the crosswalks, there
can’t be. Use of the GEMS files serves many purposes, but they can’t be used
for coding and they weren’t designed for the coding we heard that daily today.
At almost every instance, it’s going to get you to the unspecified code because
of the I-9 source. However, providers need to be very careful on the use of
crosswalks, and any information that they’re getting 60; 60; 60; 60; 60;
regarding that. For providers to make the GEMS work for them, they have to take
the extra step and that actually involves the usage of the code book to
finalize code choice selection.

There are many vendors who are offering crosswalks and mapping, but if those
additional choices aren’t shown as available, providers could end up making the
wrong choices and submitting them on the claims, or only coding in an
unspecified circumstance, which gives us no additional benefit or information
from the code sets as well, and which will lead to unusable data.

Vendors should really be cautioned on selling providers to the use of the
GEMS files as a coding solution. I’ve been out to a lot of providers’ offices,
and one of the first questions that I ask them is what are you doing to prepare
for ICD-10, and it is surprising to me, overall, how many of them feel that
their EMR vendors are going to fix this for them. So there’s a lot of education
that we still need to have take place and to explain those circumstances as
well.

There are many circumstances in ICD-9 where providers had to use an
unspecified code because there wasn’t another choice available. We fixed that
in ICD-10, but if that unspecified ICD-9 code is just simply walked over to
ICD-10, it’s going to give you the unspecified code when there are probably
many other choices available that would be better used.

If providers are going to use solutions that include crosswalking, those
vendors should be questioned as to what additional steps they have used beyond
the GEMS, so that providers can make an informed decision on whether or not to
incorporate them in their practices.

Now in addition to providing the trainings that I discussed earlier in these
systems. The AAPC has actually been providing free in-person trainings to
– we have 474 local chapters, and we’ve actually been able to get out to
100 of those, giving ICD-10 presentations for free through those, across the
United States, as well as providing free webinar-based trainings. We continue
to work with the State and specialty societies in a participation with others
in the industry, through stakeholders’ meetings, working through CMS and
working through our speaking engagements, to build the awareness out in the
provider community.

I have to say that in the provider community there is still skepticism on
the implementation date being enforced. Now we believe that if there is a
successful transition to 5010 by all in the industry with no delays, then this
will help show them that the times have changed and the implementation date is
form. Providers are beginning to understand that ICD-10 is not a simple IT or
vendor fix, or that it’s not just the purchase of a new code book. We continue
to build awareness and encouragement of providers, to work with everybody in
health care during changing times, as it will only be working successfully with
contracted health plans, vendors and all others that are involved in the
delivery of health care technology and the practice that providers will be able
to successfully make the transition to ICD-10.

In our membership, there is indeed a sense of urgency to learn ICD-10, and a
sense of urgency in the providers towards that, but many other initiatives that
all take the same time and the resources are vying for their attention, and
it’s really hard for a provider to know which direction to turn first and where
to spend the resources right now.

If there is a contingency plan developed, and one will be needed, it should
not contain a delay on the implementation date. For the providers’ community,
the contingency plan that would include some type of advanced payment, if
claims submission is hindered, would be of assistance, but if a contingency
plan is offered up that includes an extension of the date for the deadlines for
the preparation, I guarantee you that we will continue to put ICD-10 on the
back burner. So it’s just something that we want to keep on line, and we keep
trying to get the word out there that that date’s firm and we need to get
through on there, because if we don’t, we’ll continue to just put it on the
back burner and fix those immediate fixes that we need to at this moment.

DR. WARREN: Thank you for mentioning about the date, because we heard that
loud and clear when we had our hearings a couple of years ago to set the
timeline.

Our next speaker is on the phone, Holly – are you there? Holly is from
the Health Care Billing and Management Association; Holly Louie, you’re up.

Agenda Item: Healthcare Billing & Management
Association, Holly Louie

MS. LOUIE: Thank you very much. HBMA has more than 600 members that process
an estimated 350 million claims per year. The transition to ICD-10 is the far
most reaching change our industry has seen in most of our professional lives,
and it touches every facet of health care delivery, documentation, operations
and reimbursement. In reviewing how resources have been allocated, it is our
view that a disproportionate amount of time has been directed toward educating
providers about the effective date, and too little time and too few resources
have been directed toward educating providers about the operational and
financial issues that will occur as a result.

The emphasis on dates, rather than the need for process change, has caused
many providers to conclude that this transition is a series of technical
changes that will have little direct impact on their practice. Although we are
confident that most billing companies and their vendors are as prepared as they
can be for the transition to 5010, there are some troubling signs. Many
physicians and billing companies are relying upon their software vendors and
clearinghouses to be 5010 compliant. While it is true that vendors and
clearinghouses will be responsible for compliant claims submission, the
perception appears to be that 5010 is a solely technical issue that does not
impact them, and that no actions are required. It also appears physicians and
billing companies may not fully appreciate the need for individual testing by
client and specialty, in addition to the work their vendor and clearinghouse
are doing with payers.

We are concerned that provider-specific information in vendor and
clearinghouse databases is not up-to-date, not consistent with PECOS, because
physicians are unaware of the potential issues, have not budgeted the time and
labor required and/or some physician practice management systems are not able
to accommodate the required modifications. Although testing may be technically
5010 compliant, the situation will lead to claim rejection. A primary concern
is that testing will not expose these discrepancies, and only when live claims
are denied will providers learn that there are issues.

Further, we are concerned that there is a disconnect between what vendors,
clearinghouses and plans mean when they say they are 5010 ready, and how those
words are being interpreted.

We have learned that 5010 ready may mean internal testing is done, external
testing is in process, external testing is scheduled, external testing has been
successfully completed. We are also concerned that 5010 ready currently applies
almost exclusively to claims submission and does not include functionality
available with full 5010 implementation.

We believe that providers and some billing companies may believe that the
January 1, 2012 is a once and done date. We applaud the new enforcement tools
available to CMS under health care reform HIPAA HITECH to ensure plan
compliance with 5010. We also understand the need for and support of the phased
implementation deadline to complete the full transition rather than the final
limited implementation and benefits the industry experience with 4010.

We would like to stress that the current statute implementation deadline
requirements are not later than. HBMA asks, and CDHF and CMS actively encourage
compliance as soon as possible, rather than allowing each requirement to be
implemented at the latest date available under the regulation. It is widely
acknowledged that the industry should plan for at least a year of disruption
and additional work following the January 1st go live date, to allow for
identification and correction of issues, in addition to problems with payers
who cannot meet the January 1 deadline.

In addition, recent estimates from payers at HIMSS meeting, indicate a two
to five-year period post ICD-10 implementation, during which programming
corrections, claims errors, payment delays, rebuilding of risk databases, new
payment policies, and other operational challenges will need to be resolved. As
all of you are aware, the dates for stage 2 implementation are concurrent with
ICD-10 implementation, as well as multiple other key initiatives. HBMA believes
that the operational staffing IT and financial burdens on our industry will be
far greater than planned or budgeted. Very few health plans – published
averages range from 8 to 12 to less than 15 percent – have successfully
completed testing. There are approximately 134 business days left to complete
5010 readiness.

Given the large number of health plans that have not yet begun testing, the
number that have no estimated date for testing, and the amount of time it takes
to conduct and complete the testing process, with no guarantee it will be
successful, there will be some significant percent of the industry who will not
be able to complete testing and be compliant by January 1, 2012. We anticipate
significant delays with the processing of claims during the initial phase of
implementation and beyond. Some payors that are unable to meet the deadline
will reverse –- 5010 to 4010, as an interim solution. As these payors
complete programming and system changes, and are able to process 5010 claims in
2012, additional issues will arise.

The lack of readiness is further complicated by the inefficiencies, cost and
delayed payments associated with the necessity to support 4010 and 5010 to
accommodate payors that are HIPAA-exempt, and for payors with disparate
implementation schedules. If a primary payor is 5010 compliant on January 1,
2012, and a secondary payor is not, — processes paper claims and other costly
interventions will be required. The bottom line for the physician or provider
is additional increased cost and delayed payment for the foreseeable future.

The external testing process must be accelerated, in our opinion. We
strongly urge the Office of E-Health Standards to do the following.

Assess the readiness of health plans to test now, and determine why so few,
as a percentage of the health plan industry, have successfully completed,
areoffering live testing.

Two, to seek from the plans their own internal assessment of readiness for
both testing and full compliance; and three, to obtain from plans that will be
unable to meet the January 1 deadline a contingency plan to accept a 5010
compliant claim.

The need to convert 4010 to 5010 or 5010 to 4010 to allow co-processing
should be prevented as much as possible, and should not be as prevalent as it
appears it might be. There should be a compliance contingency plan that would
extend for a short and specified period of time after January 1, 2012. Specific
to ICD-10, this does not appear to be a priority or have a sense of urgency
from most physicians at this time. Although some facilities have begun work on
ICD-10, it is not universal and does not have widespread physician
participation.

While there is no disputing the criticality of planning for ICD-10, the fact
is there is simply not enough money, staff or time to tackle all of the
competing requirements at once. HBMA believes that a major factor in the lack
of urgency is the unknown reimbursement impact; yes, CMS has analyzed the
payment impact using GEMS on an inpatient claims basis, however for a
physician, the key question is one of payment, not coding. This key question,
which neither CMS nor the commercial payor community has definitively answered
is, will unspecified diagnosis codes be reimbursed under ICD-10? Similar to
5010 communications, the message to physicians has been that this conversion
will be easy, they do not need to modify behavior and EHR, a mapping software,
will be the miracle solution to the issue, and yes, there still are unlisted
codes.

As anyone who deals with physician documentation on a regular basis can
attest, many medical records lack the details necessary to support the
specificity in ICD-9, much less ICD-10. If payors intend to require the most
specific diagnosis code for payment, significant time will be required to
educate physicians and assist them in accurately and completely documenting
services. We believe until such time as the payment effects are known,
physicians will have no sense of urgency, or believe any modifications or
actions on their part are required. Again, they are looking to vendors for the
solution to any issues that may arise.

We also understand that many payors will rely upon internal proprietary
mapping from ICD-10 to ICD-9 to adjudicate claims. A payment determination will
be made based on the ICD-9 code, but the ICD-10 code will be reported with the
payment or the denial. The effect is that the plan adjudicates a claim based
upon a completely different code than the one intended or submitted by the
provider, who does not know what happened behind the scenes.

HIPAA-exempt payors may choose not to implement ICD-10, given current
experience; the fact that ICD-9 will not be maintained is no deterrent
whatsoever. Two coding protocols will require maintenance of parallel systems,
or the purchase of a new system that supports those ICD-9 and ICD-10, an
additional cost with no end date in sight.

Based on our current experience with ICD-10, we are very concerned the
industry will not be ready for the conversion to ICD-10. Preparation for much
of the industry is in the infantile stages or has not begun. No coordinated
testing is on the horizon. No payment policies have been announced. Variable
unknown mapping programs will be relied upon, and no published study has fully
examined the financial and payment impacts for physicians, and no known
contingency plans exist.

Given the literally hundreds of payors and thousands of plans, this is a
monumental undertaking. We strongly urge CMS and other health plans to clearly
publish their policy with respect to the level of coding that will be expected,
and more importantly, reimbursed. On behalf of HBMA, I want to thank you for
this opportunity, and I’m sure I have like three seconds left, but I just
learned that my colleague who is there with you, Bob Ehrlich, has some hot off
the press information from HBMA from a survey done on the national testing day
on Wednesday, so if he has a few seconds or an appropriate time, that may be of
benefit to the Committee. Thank you very much.

MR. EHRLICH: HBMA conducted a straw poll yesterday based on the testing day
on Wednesday. It was very quick and dirty, and a lot of this information is
pretty crude, but essentially, 59 percent of those who responded indicated this
was their first test. Another 41 percent indicated that it wasn’t their first
test, that they had been tested. There were 41 percent of those who submitted
test claim, 41 percent of them were acknowledged, 59 percent of their test
claims were not acknowledged, or at least had not been acknowledged by the time
they answered our poll.

We asked some satisfaction questions, completely satisfied, mostly
satisfied, moderately or poorly satisfied – 47 percent were satisfied with
the process and the results, and 53 percent were not satisfied either
moderately or very dissatisfied. We’ll have a more comprehensive poll with a
lot more granularity in a week or two. We’re doing another webinar next week
and after that webinar, we’ll be polling our members, a much more comprehensive
survey.

What this essentially revealed was that they were testing mostly with the
MACs, that the testing was spotty, and obviously, if we get down to various
individual contractors, the answers would be quite different, but just as kind
of a quick reference, it was not quite the smooth and efficient process that we
might have hoped for.

DR. WARREN: Would you be willing to share your results after your next
survey with us?

MR. EHRLICH: Absolutely. I’m on the Survey Committee, too.

DR. WARREN: That is just great information for us to deal with. Did you need
one more minute to summarize?

MR. EHRLICH: Well there were a couple of other things; one that hasn’t been
talked about so far, and that is the Medicare sustainable growth rate, which
is, for those of you unfamiliar – Medicare’s payments to physicians is
based upon a very complicated formula, and about 12 years ago, that formula was
created, and essentially, at the end of this year, December 31, Medicare’s
payments are scheduled to be reduced by 30 percent. That’s an economic engine
that drives that formula. Now for about ten years in a row, we had the annual
game of Medicare check-in, where Congress legislatively overrides scheduled
reduction, but over the last three or four years, that’s turned into political
theatre, and we’ve had over and over, repeated sometimes three times in one
quarter, adjustments or almost adjustments, and the consequence is, it creates
chaos within the Medicare contractors, who get notice at the last minute, or
two weeks after the last minute, to adjust how much they’re going to pay, and
the current fix expired December 31, 2011, right on the hinge of 5010.

So we have the opportunity for a perfect storm, and if Congress, and this
has nothing to do with any of us, if Congress doesn’t solve the problem
promptly and they kick it over to the next year, now we have contractors who
are trying to figure out how to process a 5010 claim, but now they’re going to
have additional adjustments to work into the equation. So we have what could be
a very perfect storm.

One other concern that we have that was mentioned by several this morning
was for Medicaid, but I think others, where the default solution is going to be
a paper claim. I don’t think that because of the history of electronic claims,
that the insurance industry, Medicare contractors, Medicaid programs, are
equipped to deal with the tsunami of paper claims that will hit them. They
stopped staffing for paper claims years ago because they could, because they
ought to. Well if that ends up being the solution and truckloads of claims
begin to show up, the concern we have primarily is Medicaid, because they’re
the payor of last resort, they’re the payor of least amounts, and providers who
are basically starred for those payments will simply stop seeing Medicaid
patients, and this is now a patient access issue.

Agenda Item: Leading Age, Iara Woody (written)

DR. WARREN: Our next speaker is Iara Woody; however this is going to be a
written submission, so our next real speaker is Lisa Wichterman from Worker’s
Compensation.

Agenda Item: Workers Compensation, Lisa
Wichterman

MS. WICHTERMAN: Thank you to the members of the Subcommittee for the
opportunity to present today. My name is Lisa Wichterman, I’m the Medical
Policy Specialist at the Minnesota Department of Labor and Industry Worker’s
Compensation Division. I will be presenting to you today, from the Workers’
Compensation perspective.

Currently only three states have mandated ASC X12 Version 5010, Electronic
Transactions for worker’s compensation. Therefore, most of my presentation will
focus on the implementation experiences in Minnesota.

In 2009, the Minnesota legislature mandated electronic medical transactions
for all health care providers and payors, including Worker’s Compensation.
Today I am going to go through an example of how ASC X12 Version 5010 applies
to a compensable worker’s compensation medical bill. As I present the
information, please keep in mind that worker’s compensation differs from
general health care as it is a legal system, based on statutes and rules.
Worker’s Comp has taken an electronic format designed for transmitting health
care transactions in the general health care insurance system, and has made
modifications to allow for submission of worker’s compensation and health care
transactions while remaining compliant with jurisdictional legal requirements.

So let’s start at the beginning. An employee is injured at work and reports
to his doctor for medical treatment. For general health care the doctor’s
office would electronically check the patient’s eligibility for benefits. In
worker’s compensation, the insurer has not yet received a first report of
injury, therefore the eligibility transaction does not function. Currently,
Minnesota’s worker’s compensation is exempt from the eligibility transaction.
So the injured worker receives his medical treatment and the billing process
begins.

For the 837 transaction, there’s some terminology in worker’s comp that
differs from general medical. In general health, a claim is a specific 837.
It’s one bill. For worker’s comp, a claim refers to the entire episode of
injury, from the date the employee is injured to the date the entire claim for
that injury is closed. The insured in worker’s compensation is the employer of
the injured worker, not an individual. The injured worker remains covered by
the same insurer as long as medical treatment is needed, even if the injured
worker is no longer employed by the injury employer.

So the health care provider produces an ASC X12 Version 5010 837P. In
Minnesota and in most states, the health care provider is required to submit
the medical record or other documentation explaining the need for the services
and the relationship of the services to the injury along with the charges.
Transmitting the electronic medical record along with an 837 has been, and
still is, one of the biggest challenges in the electronic process. To remedy
this challenge, a method has been developed to match the 837 with the medical
record through the use of a unique number placed in the 2300 PWK segment of the
837, and the same unique number placed on the paper medical record, so the 837
and the medical record can be paired together.

Currently, most medical records are faxed from the health care provider to
the work comp payor. We anticipate this issue will be resolved with work that
HL7 is doing with the attachment piece.

Now the medical records have been faxed to the work comp payor, and the
health care provider is ready to submit the 837P. The 837P is sent to the
health care provider’s clearinghouse, the provider’s clearinghouse prepares the
837P for submission to the work comp payor’s clearinghouse, however there may
be transaction roadblocks between the clearinghouses, and these roadblocks
include: refusing to pass transactions from clearinghouse to clearinghouse,
citing contract issues between clearinghouses, disputes on who pays for these
electronic transactions – is it the provider or the payor? This problem
was so significant that Minnesota amended the law to require clearinghouses to
transmit and receive electronic transactions to and from any other
clearinghouse or trading partner that requested a connection, require
clearinghouses to provide a tracking system to ensure transactions are
delivered to their intended final destinations, require clearinghouses to
acknowledge that the 837 is received and can be processed, provide that the
provider and the payor are each responsible for their own costs for
transmissions, and make clearinghouses subject to compliance with the law.

The 837P is received by the work comp payor. The payor processes the 837P in
accordance to the jurisdiction’s legal requirements, such as a fee schedule.
This brings us to the next hurdle. The existing claims adjustment codes (CARC)
and remittance advice reason codes (RARC)did not communicate the legal citation
for the reduction or denial of a medical charge, which is required by
Minnesota’s worker’s compensation law. The ASC X12 5010 835 does not have
free-form text ability. For the 835 to be compliant with work comp rules,
Minnesota aligned with the International Association of Industrial Accident
Boards and Commissions, the IAIABC, to modify existing CARC and draft an
additional CARC that fit the jurisdiction’s legal and other needs, unique to
each state’s worker’s compensation laws. Minnesota and IAIABC members then
presented the proposed CARC codes to the X12 835 work group to ensure
compliance of the wording. Minnesota and IAIABC members then presented the CARC
to the X12 Codes Committee for voting, and we were very pleased that our codes
were approved.

The Minnesota Department of Labor and Industry then drafted specific 835
work comp rules. These rules require worker’s compensation payors to specify,
in the health care policy ID segment, Loop 2100 REF 02, or the loop 2110 REF 02
of the 835 remittance advice transaction, an enumerated code to identify the
basis for its adjustment or denial of a medical bill or charge. This code
specifies the worker’s compensation statute and rule payor is citing as the
support for its adjustment or denial. A code list that describes the basis for
adjustment or denial was developed and placed on our website for stakeholders
to access. Now a compliant 835 can be sent from the payor to the health care
provider.

Currently, the status for X12 Version 5010; in Minnesota, the Administrative
Uniformity Committee, or the AUC, has completed companion guides for the 5010
TR3’s. These guides are the Minnesota rules for electronic transactions.
Stakeholders are telling us that they’re in the testing phase and they appear
to be on track for the January 21, 2012 effective date. Industry-wide the IIBC
drafted a model law and companion guides for the ASC X12 5010 Electronic
Transactions. For ICD-10, for most work comp jurisdictions, they understand
that there’s going to be some changes related to the medical bill submissions,
but there’s other tasks that should be done to prepare for the conversion to
ICD-10, and those are to review existing statutes for ICD-9 references, review
existing rules for ICD references such as fee schedules, treatment parameters
and permanent partial disability ratings, review forms for ICD-9 terms, and
determine if additional character spaces are required to accommodate the length
of the ICD-10 codes, review instructions to complete those forms for ICD-0
terms.

For example, in Minnesota, our worker’s compensation treatment parameters,
they list specific ICD-9 codes in the rule, so we have used GEMS to translate
ICD-9 to ICD-10, and now the department must decide if the specific diagnosis
codes should be listed in these rules, or just a reference made to the
diagnosis. Either way, our rules must be updated, and for mapping after October
1, 2013, we will be using on-line sources such as those provided by CMS, and
translators from AACP.

Communication and outreach with our trading partners, what’s working and
what are some of the barriers and challenges; working with associations such as
the Minnesota AUC, the Minnesota Department of Health and IIBC on education and
communication – we sent out e-mail blasts to our stakeholders, we sent out
Twitter tweets from our Department of Labor and Industry, and every time I’m
out at an interesting meeting or I’m talking to our stakeholders, I always
mention 5010 and ICD-9, are you ready, be prepared.

The real barrier is our work comp payors. They must realize that 5010 and
ICD-10 apply to them, and some really are relying on their vendors, without
self-education. Worker’s compensation insurers are generally not covered under
HIPAA for the purposes of electronic transactions. The Worker’s Compensation
industry understands the advantages to the electronic transactions and the
conversion from ICD-9 to ICD-10, the cost savings, the consistency, accuracy
and speed. Currently only three states have mandated electronic transactions
for health care; Minnesota, Texas and California, and other states are
watching.

DR. WARREN: I want to thank you for all the acronyms, the numbers –
we’ve got a new NCVHS member this month monitoring today, and he’s already made
a comment to me that he’s encountering a whole new vocabulary he didn’t know
existed. So for all the other states, if you haven’t started tweeting yet, talk
to Minnesota.

Our next speaker is Melissa Shelk from Property and Casualty at AIA.

Agenda Item: Property and Casualty, Melissa Shelk

MS. SHELK: I am Melissa Shelk; I actually am in Federal Affairs with the
American Insurance Association. AIA is the leading Property and Casualty
Insurance trade organizations, and represents over 300 insurers that write
clearly every line of property and casualty insurance. These types of insurance
range from, like worker’s comp, that Lisa has talked about, to personal and
commercial auto, liability insurance for businesses and homeowners, medical
liability coverage and private liability coverage. So we have a vast amount of
types of insurance that we write, but we are not group held; we are not health
insurance.

Historically, the property and casualty industry has been regulated at the
state, but increasing Federal initiatives are driving this into the Federal
realm. We are uniquely positioned here in Washington to be able to respond to
those.

I’m going to start out with a little summary of where the property and
casualty industry is.

Quite honestly, until the enactment of section 111 of the SCHIPS Extension
Bill of 2007, we really did not have any reason to collect ICD-9 codes in our
claims systems, which is where this would be relevant. At that time, we were
required to be good in reporting claims information to Medicare under the
Medicare Secondary Payor Act. We are the recipients of the codes; we are not
the creators, and a correct determination is something that we rely on.

Just so you understand, p/c claims are again, not like, and Lisa referenced
this, they are not like health care claims. We pay claims for injuries
sustained on the job or as the result of an accident over on the personal and
commercial side, as I said. For us, a single bill from a provider is not a
claim. A claim is the collection of all bills relating to the same event, and
one claim may involve multiple parties from one single incident. Therefore our
claims files can be very, very large.

We process over 40 million claims a year, so I have to say the exact number
we process is not clear because we’re state-regulated, and there’s not a single
industry database that collects that information.

As I said, we never have collected ICD-0 codes except in some medical bill
pricing systems. This has to deal with medical fee schedules in individual
states. Every individual state has different compensation laws and rules and
regulations. Therefore, you have to know what each state’s rules and
regulations are, what their fee schedules are, et cetera. And again, they
weren’t relevant to our claims processes. Therefore, we have never collected
them into, let alone looked at, ICD-10 codes, or go to multiple codes.

However the passage of the MSP Reporting Requirements required us to set up
entirely new data reporting systems within our claims processes. It’s not a
matter of pushing a button, then all this information flows. Every single
property and casualty company, and there’s over 800 groups, or thousands of
companies, has to set up this system. It’s hard enough for large insurers, like
some of the ones I represent, to the small insurer, who still, quite honestly,
does a lot of its stuff on paper. They’re not fully electronically integrated.

So you can imagine the challenges that we face as of 2007. The record layout
took over a year and a half to be put out by CMS. It changed multiple times
while people were setting up their systems, but I will say, one of the 170 plus
fields that they require us to submit on every Medicare beneficiary for which
we have a claim, is ICD codes.

We were fortunate in a sense that we could set it up for ICD-9s, that also
have the fields in our systems for ICD-10. So that, just setting up those
systems has cost the industry millions and millions of dollars, although CMS,
when they estimated the Paperwork Reduction Act, under the Paperwork Reduction
Act, said it would be minimal and probably less than 100 dollars per company,
or several thousand per company, depending on their size.

We began reporting to them for worker’s compensation claims January 1, 2011.
What is amazing to us is that we are finding most of the reporting errors that
we’re receiving back from the system are rejection of files for incorrect ICD-9
codes. We input the ICD-9 codes we get from providers, or under this reporting
system, there are certain ICD-9 codes that are not permissible. Unspecified is
not permissible. When you have unspecified, we are supposed to make our
determination of what is the appropriate code. This may be part of what the
errors are, but I can tell you, it’s not the biggest part. It really is that
there’s a rejection of codes by the CMS contractor, reporting contractor, with
what has been submitted by providers to us and providers to CMS.

Why is this really important to us, and the ICD-9 issue? It’s because under
Section 111 Reporting, we are subject to very onerous fines. One thousand
dollars per day per claim, for reporting errors. When you have 70 percent
rejections, that’s a reporting error.

Now I will say they haven’t started enforcing it; they haven’t really
actually told us how they’re going to enforce it. We can only report, though,
once a quarter, and the base fine for a single claim is 90 thousand dollars.
Therefore, a major issue we face is getting the correct ICD-10 codes.

I will say, we’re ready to convert in terms of our programming, but what
we’re very, very concerned about, quite honestly, or the issues that we face,
are what we report and what we collect are only as good as the data we receive,
and there are particular problems; Lisa quite eloquently talked about all the
issues with worker’s comp. Liability is even more difficult.

Liability insurance is protection arising from claims or injuries to other
people; property is not relevant here. A liability claim is when an entity
claims another has breached their duty owed under regulation administration
law, et cetera. The person or the entity the PC insurer is dealing with is
usually not their own customer. It has no prior relationship with the insurer.
One concern we have about the change to ICD-10 codes is the receipt of medical
information in liability claims. Quite honestly, when we get a liability claim,
we often get medical reports that do not have ICD-10 or ICD-9 code; again, how
are we to determine what is the correct information?

This will require us to determine the codes ourselves; outsource the
function or include it in certain bill repricing contracts, all of which will
increase costs to us. The determination will be even more difficult and
significant because the reason we’re collecting these is really only for
reporting purposes under a completely different law.

So in conclusion, like I said, we had no reason to collect codes at all. We
are trying to comply with another reporting law, and transiting from 9 to 10
will be problematic – if the providers are not ready and the providers can’t
provide the correct information to us, we’re going to have to do a guesstimate.
We’re going to have to code injury; our adjusters are not medical
professionals, and we can only code, again – if we’re trying to code,
you’ve got to look, and it’s the issue that Rhonda talked about, going from
medical report notes to actual what is the appropriate code. And again, in a
lot of cases, all we get are the medical reports, not the actual bills.

And our exposure to large fines if we don’t get it right – we’re very
concerned about everyone else in the medical community being able to actually
be where they need to be when ICD-10 codes are required, and actually us
getting the correct information, so that we can actually meet our obligations
under MSP reporting.

DR. WARREN: That is exactly why we invited you, is to provide one more
– and to understand – the whole scope of the implementation.

MS. SHEIK: To emphasize – we operate under 50 different states’ rules
and regulations, both on worker’s comp and on the liability side, under 50
different states’ tort systems, so it’s quite complicated – you take all
the complications and multiply by actually 55, it’s quite a task.

DR. WARREN: Thank you. So our next speaker is Ann Zeisset, from AHIMA.

Agenda Item: AHIMA, Ann Zeisset

MS. ZEISSET: Chairmen Warren and Suarez, members of the sub-committee,
ladies and gentlemen, good afternoon. I’m Ann Zeisset, Manager of Professional
Practice Resources at AHIMA. On behalf of AHIMA and its 61 thousand members, I
would like to thank you for the opportunity to share what our HIM professionals
are doing to achieve the full implementation and use of the upgraded HIPAA
transactions, as well as ICD-10 CM and PCS.

For those of you who are not familiar with AHIMA, we are an 83-year-old
non-profit association of professionals. We have been educated, certified and
are engaged in the management of health information, for HIM professionals are
directly involved with the HIPAA transaction upgrade, however HIM professionals
are engaged to ensure that classifications codes are incorporated accurately
from the organizations’ clinical systems into the various claims applications,
and in turn, transmitted externally via the HIPAA transactions.

AHIMA has co-sponsored the Get Ready 5010 Project, which has already held
two very successful series of education programs, and the Get Ready 5010
website includes these education sessions and other resources that serve
various industry segments. Our ICD-10 CM and PCS education efforts have taken
many forms, including academic programs or classes, volunteer professional
programs and on-line education. Programs are offered on a state and national
basis and also include education on subjects such as mapping, auditing,
implementing systems and ensuring correct coding processes that prevent fraud
and abuse.

In 2009, AHIMA initiated ICD-10 coding academies to train those individuals,
who in turn will be expected to train other individuals in the coding with the
ICD-10 classification, educate students in HIM academic programs, including
ICD-9 and 10, or become consultants to organizations in need of assistance in
training or implementation.

Since we have begun the academies, we have trained over 1800 individuals.
AHIMA believes that the training of front-line coders should be on a timetable
that will allow those coders to be trained and then apply their training and
practice on their internal systems shortly before the compliance date, so as to
ensure retention of content.

AHIMA’s academies address all health care providers and educators. In
addition, there are a variety of classification, or code, users, within
providers, health plans and organizations, who function in the areas of
quality, public health, registries, research, reimbursement, auditing and so
on. These individuals also require training that can address their needs, and
not just the needs of clinicians. While some, like coders and clinicians, need
their training to occur closer to the actual compliance date, others must
prepare new data, or value sets, new data warehouses and other changes well in
advance. AHIMA and its partners are now addressing these areas.

AHIMA has also worked closely with CMS staff and consultants in providing
educational webinars which have reached thousands of stakeholders. Training of
coders to ensure the integrity of the information they code and their ability
to code in a variety of settings is important. AHIMA is also focusing on the
implementation of ICD-10, aiming education efforts toward HIM and IT directors,
as well as those who are responsible for the hardware, software, testing,
staffing and training associated with the classification implementation.

Implementation of ICD-10 aligns significantly with other national efforts,
including 5010 implementation, quality measurement and significant detail for
meaningful use, value-based purchasing, ACOs and a variety of other external
Federal and state requirements, and internal processes and systems changes.

AHIMA has held three annual summits on ICD-10 since 2009. Subject matter has
varied, as well as the audience. It is clear, organizations and professions are
making progress in implementation. In fact, the demand is now becoming how best
to use the detail that will be available from the use of ICD-10 CM PCS codes.

AHIMA’s ICD-10 website offers a variety of resources to the industry at no
cost. The content is continually updated and refined, as we learn from those in
the field, and the changing health care environment. AHIMA resources also
contain a myriad of textbooks and guides to ICD-10 implementation, and more are
being planned, both in paper and electronic formats. AHIMA-related state
associations are planning to offer coders training between 2012 and mid-2013.
Many are already working with their members, and other state associations, to
coordinate this training. Most HIM state associations also have projects
underway for issues concerning local efforts such as testing can be discussed
and then coordinated with state trade associations, health plans and others to
facilitate cooperation and mutual assistance in the implementation process.
Included in this effort are collaborative projects to offer assistance to
Medicaid agencies in the areas of implementation and testing, training, legal
barriers and the fact that many agencies are not using a current version of
ICD-9 CM.

We cannot look at the present without looking at the future. We must ensure
that our health care providers and plans, along with our policymakers,
understand the crucial role that ICD-10 CM PCS will play in the parallel
Federal goals and projects I mentioned, if we are to achieve our overall goals
of improved health care and lowering the costs of health care. Sending mixed
signals on whether or not ICD-10 will occur in time creates uncertainties for
organizations on whether to move forward with implementation. Our industry’s
academic programs must also train a whole new generation of coders who will not
only serve in traditional coding roles, but also in new roles that address data
integrity, editing, documentation, auditing and fraud and abuse.

The current shortage of educated and certified coders is a geographic
problem in a situation where health care employers must recognize new and
transitional roles and needs for coders that are crucial to meet the
transformation in the use of classification data. This transition not only
addresses changing reimbursement systems, but also for purposes of meeting our
health care goals of improved quality, patient safety, research and population
health.

A significant amount of work is being conducted and accomplished by AHIMA
and its members across the industry, with a variety of partners, and we are
seeing efforts bearing fruit. We look forward to October 1, 2013, when this
country joins with our international partners in using a 21st
Century classification system.

Thank you again for this opportunity to discuss these issues.

DR. WARREN: So our next speaker is Laurie Darst, from Mayo, with WEDI.

Agenda Item: WEDI Update on Industry Surveys – 5010
– Laurie Darst

MS. DARST: Thank you. Members of the sub-committee, I’m Laurie Darst,
Revenue Cycle Regulatory Advisor at Mayo Clinic and also member of the
Workgroup for Electronic Data Interchange, or WEDI, Board of Directors. I’d
like to thank you for the opportunity to allow me to present testimony today on
behalf of WEDI regarding the readiness to implement HIPAA 5010 version.

WEDI represents a broad industry perspective of providers, clearinghouses,
payors, vendors and other public and private organizations that partner
together to collaborate on industry issues. WEDI is named as an advisor to the
Secretary on Health and Human Services under the HIPAA regulation, and we take
an objective approach to resolving issues.

Now a little background on our testimony today. WEDI had conducted periodic
surveys on industry readiness for both 5010 and ICD-10 since 2009. Since 5010
readiness is a predecessor to ICD-10, it’s important to consider 5010 survey
results as well as the ICD-10 survey results when assessing industry readiness.

The first set of surveys were released in November 2009, with separate ones
for 5010 and ICD-10. These surveys were meant to gather high-level initial
readiness baseline. The surveys included separate sections for software
vendors, clearinghouses, health plans and providers. The number of questions
were very limited.

Follow-up surveys were conducted for 5010 in May of 2010, and for ICD-10 in
June of 2010. Subsequent surveys for both 5010 and ICD-10 were again conducted
in January of 2011. Results from the last two 5010 surveys are discussed in the
following section. Results from the ICD-10 surveys are being delivered as a
separate testimony by Jim Daley, next to me.

Please note that these surveys should not be considered as a perfectly
balanced representation of the state of the industry. Historically, WEDI
membership and survey participants tend to be more aware of industry issues,
and correspondingly, more advanced in addressing these issues. Therefore, the
survey results would tend to provide a somewhat more advanced picture of
readiness progress.

The next section talks a little bit about the respondents of the 5010
surveys, and again, it would be both for the May 2010 and then for our January
2011. The demographic perspective: there were 195 survey participants in
January 2011; overall survey participation decreased slightly from the number
of respondents in May of 2010, when it was 219. And you can see the breakdown
of those survey participants, and again, you can see that there is a slight
decrease in provider participation in January.

Now I would just like to point out some important findings from the last
survey. According to the survey, the industry simply has not met the NCVHS test
recommended level 1 compliance readiness date, which recommended that all
internal testing be completed no later than December 31, 2010. And based on our
survey indications, most external testing, and you’ve certainly heard this, I
think, already today, will occur in the last six months of 2011, between July 1
and December 31. And again, nothing that you need to be reminded, but the
recommendation from NCVHS tests was that level 2 compliance would have started
in January of 2011.

This next section of our testimony highlights some references to changes
indicated across the survey, as a means to illustrate the rate of progression
toward compliance. Our comments compare May 2010 survey results to the January
2011 survey results, and I just want to also make a point of recognizing that
this last survey was done in January; we hope to have another survey coming out
soon. Unfortunately, just not in time for this hearing, so I want to make that
comment.

The first category dealt with major system upgrades. We know that most
everyone needs to have some sort of system upgrade, but we found with 4010 that
many providers, especially, had to do major system upgrades to be able to
accommodate the data content and the format used in those transactions.

However this time, we’re seeing only approximately a third of the providers
responding that are going to be undergoing a major system upgrade as part of
their 5010 implementation. We see a slightly higher percentage, almost half of
the health plan respondents, doing a major system conversion, as part of their
5010 implementation. Some of these upgrades may also incorporate ICD-10
components in the upgrade.

Internal testing continues to be an industry-wide concern. Providers
responding in January 2011, indicated that little over half, versus only a
third in May of 2010, anticipated that they will have completed their internal
testing by July first. On a positive note, providers who in May 2010 indicated
they were unable to determine whether internal testing would be completed went
down significantly between the May and January survey.

Vendor responses indicated a slight decrease in anticipated internal testing
readiness by July first of 2011, at about 83 percent. Health plans anticipating
internal testing completion by July 1, 2011 remained about the same as the May
2010 survey at 83 percent.

Just now some comments about external testing. In May 2010, two-thirds of
the providers indicated that they were not able to determine when they would
anticipate completion of external testing, as opposed to about one-third in
January 2011. Providers who anticipated completing external testing after July
1st went from a quarter in May 2010 to about half of the providers in January
2011. This seems to correlate primarily to what the survey shows in terms of
vendor readiness.

While the start of vendor customer beta testing did not really change, we
saw a significant shift in the estimated completion of beta testing, from 90
percent anticipated completion by July 1st in 2011 in the May 2010 survey, to a
little over half of the vendors estimating completion by July 1st in this
year’s survey.

There was also a shift in the availability of software for customer
installation from the July 1st survey. Based on discussions at the 5010
sessions held at the WEDI conferences and forums over the past year, we could
deduce that this shift is likely related to the timing and issuance of the
errata notification by CMS/OESS just last year.

Many vendors, and as a result, their customers, did not work on
incorporating their errata in products until the notification was issued. We
saw some health plans move forward with their 5010 implementation in stages,
which is moving non-errata 5010 into production, and then a second production
release with the errata included.

I’m going to just skip over to the outreach and communication, just in the
interest of time. A third of the health plans indicated all of their providers
have been contacted on 5010 by the January 2011, while those health plans
indicating that none of their providers have been contacted went down
significantly. Over three-fourths of health plans reported their provider
outreach plans had been deployed by January 2011. Over two-thirds of vendors
indicated all of their customers had been contacted on 5010 by January 2011.

This shows that stakeholders recognize the importance of communicating with
each other during the planning and implementation process.

I want to share with you some observations from the survey; again, providers
– these are some general observations on how the industry is doing and
what we need to do to mitigate the risk to noncompliance.

Providers and vendors who have not completed their system upgrades need to
move forward with this, and subsequently, providers who have not completed
their internal testing should complete this and schedule external testing as
soon as possible. Health plans should continue to conduct outreach to providers
and training partners. The WEDI/NCHICA timeline estimated the transition phase
should occur between January through December 2011; again, based on our survey
results, this is not starting until July first.

I wanted to share with you a couple other observations from the WEDI early
adopter sub-workgroup, and these are their observations. Health plans continue
to make translator changes; and I think we heard a little bit from Debbie
Meisner this morning about this. Based on initial testing with industry trading
partners, clearinghouses also indicate that changes are required to accommodate
the translator requirements.

Clearinghouses have also noted there is a variation in how health plans have
implemented the 999 and the 277 transactions. The majority of vendor software
update planned rollouts should be in place by September, based on projections
to date, which puts the majority of the industry transaction testing during
late September through December, even farther back.

This further impacts trading partner readiness based on the volume of
testing scheduled to occur during this time frame and the lack of resources to
accommodate the test volume. There is wide variation of provider readiness from
those who are testing with health plans to others who are still in their
initial gap analysis.

So in conclusion, WEDI supports the continued effort of all stakeholders
toward meeting the compliance date, continued collaboration and communication
by industry participants is needed and must be accelerated in order to assist
those lagging behind in achieving this goal.

Members of the sub-committee, thank you for the opportunity to testify and
WEDI offers our continued support to the Secretary and to the industry in
achieving compliance.

DR. WARREN: Our next speaker is Jim Daley, from Blue Cross Blue Shield South
Carolina, representing WEDI, the ICD-10.

Agenda Item: ICD-10, Jim Daley

MR. DALEY: Thank you. I’m Jim Daley and I’m a WEDI chair-elect and the
co-chair of the WEDI ICD-10 workgroup, and I thank Laurie for covering my
second slide of who WEDI is.

As Laurie mentioned, we’ve done four industry surveys. Four were ICD-10
related, and you can see by the chart in front of you the number of respondents
by categories, and you do note that it has gone down a bit throughout the
years; I don’t know if they’re getting surveyed out or what, but the first
survey was very high level; asking questions like have you started, how
complete is your product or impact assessment, and what are some of the risks?
It was very simple to answer those.

Subsequent surveys got a lot more detailed; questions on communications or
approaches, and things of that nature.

Here’s what we’ve seen in the surveys. I think it’s good to look across
surveys to see if there’s a trend that’s developing in there. In November,
again, it was high level, and showed that work was beginning but kind of slow.
A third of the providers, half the vendors, clearinghouses and health plans had
started something on ICD-10. The vendors – 80 percent were a quarter or
less done with the product development, so they’d started, but they really
weren’t far along in their development.

Some of the things cited were other initiatives were delaying the efforts,
and we didn’t ask which initiatives, but I think we all know which ones they
were.

Interesting point I bring out in this survey is the vendor products. The
vendors said about half would be ready in 2010 or 11, and another half said
their products would be ready in 2012 or 13.

In the January survey, January 2010, little progress from the previous one,
because it’s only been two months, so that’s very understandable. But the
respondents from the vendor segments now said only 20 percent said they would
be ready in 2010 or 11, and 80 percent projected 2012 or 13. So you see a shift
in when they felt their products would be ready for testing and installation at
their customer sites.

On the bright side, executives were aware of ICD-10; we had over 95 percent
of the executives and providers, payors, et cetera, said absolutely, they know
this is on the horizon, so it’s not like it was a surprise. They just hadn’t
moved along at that point too much.

In June 2010, again, progress is moving along; a little bit slowly but it’s
moving. As far as impact assessments, over half the vendors and payors and
about 30 percent of the providers said they were a quarter or less complete, so
they’re working on them, but again, they hadn’t really gotten that big mass of
work done at that point.

Interesting note; we saw it wasn’t a large shift, but those that originally
said cross-walks were their primary approach, there’s a slight shift toward
saying now we’re going to go on ICD-10 native processing, so that was an
encouraging point, starting to see that there may be value in going directly to
10. But certainly, a high percentage still said we use some kind of a
combination.

Communication was limited, but it’s starting. Seventy percent of the
respondents said they have talked to their vendors, but again, was that one
vendor or twenty-five? We really didn’t get to that granularity, but they at
least started asking the questions.

Half of the health plans said they started a dialogue with providers, and
again, the number they’d started with, we don’t have that breakdown.

January 2011, which is our latest survey, and as Laurie mentioned, we’re
going to have another survey later this year, maybe September time frame or so,
we saw people making progress on the impact assessments. The payors, about half
were either complete or three-quarters complete, providers, most said they
would complete it sometime in 2011; a little later than we want, but still
that’s within this year at least.

The vendor product test and delivery dates were unclear. Eighty percent have
not given information on their beta test dates. Again, there was a small number
of vendor responders in this last survey, but it was very consistent. We’re
doing our thing, but we haven’t necessarily gone out and said here’s when you
can expect our product to be on your doorstep. And most providers had contacted
at least some of their vendors.

And here’s a comparison against the WEDI NCHICA timeline. Again, this is the
revised timeline, where we shifted some dates, recognizing people were getting
a late start. If you look at the January 2011 goal, where health plans should
have completed their assessments, providers should have had at least a high
level assessment complete by that point in time. Based on surveys, about a
third of health plans were fully complete and a fifth were three-quarters
complete, so we’re gaining some momentum in those that have done their
assessments, but on the other side, a fifth were 25 percent or less complete,
so there’s still some stragglers out there, but it is gaining momentum from
some of the earlier surveys.

Almost half of the providers were fully complete, or were complete by the
end of March, so that’s fairly near. Then most of the remainder is expected to
complete by December of this year.

Looking further down the timeline, October 2011, the vendor product,
customer review and beta testing would start in October 2011, according to the
revised timeline. As of January, about two-thirds of the vendors responded they
hadn’t started, or were 25 percent or less complete with their solution
development. A fifth expected to begin customer review and beta testing in
2011; half in 2012 and one-third said unknown, so that sounds a little
contradictory to having all this testing beginning in October of this year,
unless all of those unknown really didn’t know the date, and it was going to be
right about now. We didn’t get into why they said it was unknown.

A little further down you’ll see that January 2012 through January 2013,
providers and health plans should be deployed in testing the vendor software,
so again, that vendor software readiness is important, and some of the
communication of when that’s going to be ready to roll out, I think is a good
dialogue for the industry to be having.

So a summary interpretation of the surveys is, there’s a high awareness of
ICD-10, but progress is slower than we would hope. Organizations are falling
behind the revised timeline, but communication is growing. So it’s not all
negative, there’s some positives in here. Test and delivery dates are unclear.
We all know we’re doing on it, we’re working forward, but when we’re going to
start talking to the other party, that’s still a little bit foggy.

One thing we did identify in the surveys is some products say they won’t
support both code sets, and again, depending on the product, maybe certain
products don’t need to, but that’s certainly a question the providers and
payors should ask their vendor; are you going to support both codes – they
have to determine how that fits into their plans.

Considerations and concerns – competing priorities. 5010, HITECH,
Meaning Use, Affordable Care Act; there’s just a lot on everybody’s plates.
Vendor product delivery is a concern. Late delivery will limit the time
available to install and test, and as you’ve heard before, we really do need to
test significantly the ICD-10 changes.

Understanding the impacts – organizations tend to underestimate the
size. Some say, oh, the vendor offerings will help. Well they’ll help, but they
won’t do all of the work for you. There’s still work you’ve got to do on your
side of the shop. There’s business implications to address, and many other
things that just putting a piece of software in place isn’t going to do for
you.

Testing – a vast amount of validation will be needed, and large numbers
of trading partners. That whole bit about how we’re going to test ICD-10 is
something that needs to be worked out.

Health plan and provider communication is essential. As mentioned in some of
the other testimony, organizations may be waiting until they make their
internal assessment before they start the dialogue. Maybe it’s a better
approach to say, I don’t know all the answers but I at least want to start
talking at this point, and start that dialogue moving.

GEM usage – GEMS are not a silver bullet, a great tool, but like a
dictionary thesaurus, they give you lots of information out there, but it’s up
to the user to actually assemble them into what they’re really trying to
accomplish. And on the side light here, WEDI has put together one good white
paper on crosswalks, GEMS and applications and pros and cons and things, and
we’re in the middle of putting one together on how you actually navigate all
the GEM files, the text files and other things on the CMS website, so you can
interpret the text files and put them together into something that may be human
readable to do your analysis and things.

Host implementation monitoring – that will be essential. Everybody
expects things might be changing. How will you know if everything’s working
properly? There’s a variety of things that could happen. There could be coding
errors in assigning codes, there could be crosswalking errors if they’re doing
that, there could be programming errors. There could be legitimate differences
as a result of using the code set. And how are you going to know if there are
differences and if those differences are valid or if there’s something you need
to remediate? So it’s important to start looking at how you’re going to monitor
that.

So some suggested industry actions – obviously, continue the outreach
and education. Continue surveying to see where we are on all of this stuff.
Understand the impact of work delays. The more you scrunch down your time, the
more you’re making sacrifices. You need to understand what those are and can
you live with the risk associated with that? Encourage collaboration, emphasize
the date is the date, it’s not changing, it’s important to keep that in front
of everyone.

Publicize available resources. There’s a lot of good information out there
in the industry, and knowing where to find it can be a great first step for
everyone.

Understanding the crosswalking and use of the GEMS – developing the
testing process. That’s going to be a huge hurdle for everyone to overcome, and
figuring out how we’re going to test this and make sure it’s working, I think
is a great task in the upcoming months. Also, clarifying dual processing;
there’s a lot of confusion about that, at least that I’ve seen. Unlike the
4010/5010, where both are valid during a time frame, where you can move at your
own leisure to migrate to the new code set, to the new transactions, for ICD-10
there’s a single cutover date.

But that being said, remember there’s a runoff, so even though the date’s
over and you start using 10’s for new items, you’ve still got the 9’s on the
runoff, so making sure people understand that dynamic, I think, is important.

Considering the risks – what are you going to do when something goes
wrong after the compliance date and planning accordingly; I think Dennis
referred to that as your continuity planning, things of that nature. And a few
things out there, I’ve seen questions that need to be resolved. For example,
things that cross the date – what do you do for an authorization; it’s
early in the year, there’s a six-month authorization for GME or whatever it
might be, it’s going to be, in effect, after the compliance date, and we’re
looking for some clarification on a few things like that, paper claims, how
you’re going to handle that as well, and any guidance we can get as a result
would be helpful.

That being said, as the number 0 is about to flip over, we thank you for the
opportunity to testify and we offer our support in this ongoing effort.

Agenda Item: Questions by the Subcommittee

DR. WARREN: Questions from the committee and staff. Walter.

DR. SUAREZ: I will jump in. Well thank you, first of all, for this terrific
testimony. I’ve been trying to pull out some of the elements of what could
become observations and possible recommendations and things like that. I wanted
to test a couple of things. I mean, clearly, the core themes continue to be out
there, the education and outreach and some ideas on how to enhance and to push
hard at that; the testing, testing, testing.

I wonder if there is information, and I don’t know if out of the surveys,
about some of the other areas, not traditional medical/clinical areas, like
long-term care and the impact, and how that’s going to transition or some of
the other types of services, physical therapy, clinics and things like that.
The dental clinic is another one that I’m curious about, the dental
transactions are significant. Then the pharmacy transition and the pharmacy
transactions going to –- is there any sense of how those industries –
how those sectors of the industry are doing towards compliance and the surveys?

MS. DARST: Some of these would have been lumped into the provider, but we
don’t have the breakdown of types of providers responding. I probably assume
that long-term care did not respond, but potentially the dental and pharmacy
industry would be under the provider.

DR. SUAREZ: That might be one area that we might want to understand better
and look into. The other quick question I have – clearly, worker’s comp,
and it was terrific to have that included in the testimony; we were planning to
look into that as a community later this year, as part of the 10109 Affordable
Care Act provision that asks the community to look into these areas, including
how worker’s comp and the property and casualty sectors will be affected.

I wanted to ask first, you know you talk a lot about the ICD-9 and focus
most of your testimony about that, but I didn’t hear anything about the actual
transaction; which transaction are you using to exchange data with CMS,
perhaps, or whoever – is that an 837 or some sort of –

MS. SHELK: I will have to get back to you, because you’re beyond the level
of expertise that I have. The people that are actually setting up the systems
within the companies would have to answer that, but I will get that answer for
you.

DR. SUAREZ: And then the last question is, before we leave – we’re
going to probably make you our poster child for worker’s comp – a great
amount of work that Minnesota is doing, and it’s just amazing, as always. No
bias on that of course. One of the interesting things is the very first part
that you said, well we don’t do eligibility because –

MS. SHELK: — it just takes so long from the time of first report of injury.
An injured worker is injured, he goes to the doctor. The first report of injury
might not even get to the insurer for 14 days.

DR. SUAREZ: Yes. And that was the question I wanted to ask, is first report
of injury. And this is, of course, totally a different transaction, but I know,
back in my — this was one of the transactions that we were thinking about, and
that might be an opportunity into the future –

MS. SHELK: In the future, right. We’re kind of looking at it. We’re kind of
just being very cautious about it right now. But it is something that we are
open to look at.

DR. SUAREZ: So you’re not getting a lot of them electronically –

MS. SHELK: None. We’re –- exempt from the eligibility transaction at
this time, so they’re not even looking at it.

DR. SUAREZ: Thank you.

PARTICIPANT: Can I just comment on that? You’ve got to understand, in
worker’s comp there’s several layers. You’ve got the worker, you’ve got the
employer, who may be self-insured, and you’ve also got potentially a worker’s
comp carrier. So it doesn’t all happen instantaneously.

MS. WICHTERMAN: It can take a while. And each state’s different.

DR. WARREN: Adds to the complexity too. Bill?

DR. SCANLON: This is actually the topic that I was thinking about for the
last panel, and it applies here, and I don’t necessarily expect to have an
answer from the current panel, but feel free to weigh in.

I’m thinking about, given all we’ve heard today, how to put this into some
perspective. One of the dimensions that we’ve – actually, two of the
dimensions that we’ve heard some things about are the costs and the benefits of
these different changes, and I think that it’s really – the benefit side
motivates us, but it’s the most difficult side to get our hands around. We have
a sense of – and people talked about this greater precision that’s going
to provide new abilities; it’s hard to say what those abilities are because
we’ve never had them in the past, so you don’t really have experience to draw
on, and that totally complicates the idea of quantifying it, so again we’re
dealing, in some respects, with at this point sort of unmeasured benefits.

On the cost side, that obviously is something which is much more tangible to
everyone, but I think the committee – we need perspective on these costs,
and I think there’s two perspectives that help. One is we’re talking about what
these costs are relative to the kind of business that you’re in; we had some
numbers from –- this morning, we need to think about what’s the volume, as
a business, of insuring 130 million people? That sort of gives you some
perspective.

And the second thing to think about is that these, and this is something
that we don’t – you know, and we should continue to be aware of –
this is an investment. This is capital cost, and those costs that we’re looking
at in terms of the overall operations, they’re ongoing. They’re going to be
operating revenues or costs every year, and this is this one-time investment.
Yes, there’s going to be new investments in the future, other things to try and
generate improvements, but still, I think we need to keep perspective about
some of the –- the costs. If anybody wants to comment, fine, but again,
it’s kind of something I think – if we can get any input from any of the
panel of those kinds of issues, I think it would be helpful.

DR. CARR: Following on the presentations we heard yesterday on the all-payor
database and the multi-payor databases, it would be very helpful to get a
cross-walk of what they’re able to do today, and what they would be able to do
tomorrow with ICD-10. I accept that there are things we don’t know, burning
water-skis comes to mind, things we’ve not yet thought about, but I think a
demonstration of how that level of granularity changes things is different. I
also think about the inpatient, or procedure-based documentation differently
from the PCP, and I think we heard a little about it in the first presentation
on this panel.

For PCP, they’ll be paid on their ENM code, and they’ll list the diagnoses
that the patient was seen for, and I didn’t think I heard that the specificity
of that code changes anything more than the richness of the data collected.
Another interesting thing is that as we move to EHRs, one of the key elements
is the problem list, and we have two competing camps for how you populate the
problem list, one being SNOMED and one being ICD. So as we’re trying to
articulate the provider impact, or the incentives, in the first presentation,
line those up to understand what they might be for the primary care physician
for individual incentives, important to think about.

MR. EHRLICH: I wanted to respond to your observation – it’s been kind
of humorous to talk about the burning water-skis, but I think it actually could
help us clarify something. In the case of an actual claim, where that was the
diagnosis, the claim might go to the employer-sponsored health plan, and they
would determine that it might be a product liability, or if that person was a
professional water skier, then it might be a worker’s comp injury, or if it was
a recreational injury, then it might not be covered. So that granularity of
detail has a meaningful impact on whether the claim is paid or not, or who pays
it. So this has a real operational impact, and for people who do everyday
billing, this is everyday life.

But all of a sudden, these claims become a ping-pong ball of who has
liability, and that question may not be answered for quite a long time, and if
we have different systems, certain payors using 10, other payors using 9 –
now we have the X factor to help sort that out, or complicate it.

DR. SUAREZ: A very quick follow up, if I may. It would not only impact from
-– policy perspective who pays, but there might be – and this was one
of the questions I had, or I was going to have before, it might actually
trigger the need for the payor to begin receiving more clinical information;
for example, the famous claim attachments and medical documentation. Because
now – I used to have one ICD-9 code, and I knew it and I could handle it
without medical documentation. Now I have a thousand, like someone was pointing
out, one of the cardiology physicians, and now I need to get medical
documentation to understand and to maybe justify some of these.

So we might see a spike, also on some of those expectations, which would
create a clear demand for –

DR. SCANLON: If I could just say, I also hope we would see a drop in the
need for attachments. -– something that you don’t have to ask them a
follow up question.

DR. CHANDERRAJ: How are you going to – I know you expanded the table
for ICD-10 diagnosis code – how are you expecting to fill in that code?
Are you going to do it by yourselves? Are you expecting the provider to provide
you with the code?

MS. SHELK: Every company may do it differently. Some of them will have
in-house people who will take them literally off the billing statements that
are included in a claim, and input them. They’re going to have to be input
somehow into a claims system. Some companies submit certain claims information
already to a large private sector supported by the industry called ISO; and
they will actually do some of this input and forward it on. They serve as an
agent. Some companies will report to Medicare directly. Some will report to an
agent. But the responsibility resides with the company itself. So it’s really
going to differ from company to company depending on their resources and
literally, the amount of –

For example, auto insurers are probably going to have some of the biggest
amounts of information to report because more Medicare beneficiaries are in
auto accidents. So it will depend on your book of business. I can’t give you
one answer; one size does not fit all in this situation.

DR. CHANDERRAJ: The point I’m trying to make is the burden on the provider
is increasing with all these regulations. We have to fill so many papers, there
are 30 sheets of paper for each company there is a different kind of paper.
Providers are burdened with the paperwork and the amount of material and the
reimbursements are going down.

DR. WARREN: Lorraine has the last question.

MS. DOO: Again a very excellent panel. Thank you. I had a question for Anne
and Rhonda with respect to the number of coders. I think it was Anne that
mentioned in the past year, perhaps, about 1800 new coding professionals have
been trained; or maybe it’s in the past X amount of time. So do we have enough
coders, and what would be enough, and is this geographic issue also something
that is of serious concern. I don’t know if you would know that, but if there
was any opportunity to respond, it would be great.

MS. ZEISSET: I was the one that mentioned the 1800, and that number was the
number of trainers that we’ve trained at our academies, and those trainers
would go out and train the coders, so it’s a national effort, and we’re working
with our component state associations as well, and looking to them to provide
that training for everyone. But you did mention the geographical issue, and so
certainly some people are isolated in remote areas, and so we’ll need to look
at efforts and work with those states to make sure that everyone is trained.
But we’re doing our educational efforts on the current coders, who know ICD-9
but that need to learn ICD-10.

MS. BUCKHOLTZ: I just wanted to add one thing. We are taking the approach
that with training trainers and getting experts out there early for all those
that need to implement and work with implementation and provide the education,
but for our average coder, it’s a little bit too soon for them to start
learning the code sets, because without using it, they’ll lose it, so we’re
trying to walk that balance of making sure we’ll have enough people out there
to train the masses when it comes time.

DR. WARREN: Ok, so we’re only a little bit behind, so if people could take a
break and be back at 2:55, that gives you 12 minutes.

(Break)

Agenda Item: Session IV – Providers

DR. WARREN: So we have the fourth panel, which is our providers, and the
first group to speak is the American Medical Association, with Nancy Spector.
Nancy?

Agenda Item: American Medical Association, Nancy
Spector

MS. SPECTOR: Good afternoon; I am Nancy Spector, Director of Electronic
Medical Systems at the American Medical Association, and the AMA would like to
thank the subcommittee for inviting our input on the readiness for 5010 and
ICD-10.

This is just a quick overview of what I’ll be talking about, our 5010 and
ICD-10 readiness work, and then issues that we have identified with both of
these.

I’ve got, I know, a number of slides; I’m going to move through many of them
very quickly. In terms of our outreach and education, we started right from
when the final rules were published, and initial messaging was focused on
raising awareness, educating physicians about the requirements and more
recently, our messaging has turned to raising the urgency of what physicians
need to be doing to become compliant, and also implications if they’re not
prepared.

So this is a snapshot of our website, and this is the hub of where our 5010
resources can be found, and we’ve created all kinds of educational material. We
did a fact sheet series all about 5010 and each of those builds on one another
in terms of the content and the understanding. We also partnered with MGMA and
created a selecting a practice management system tool kit, and in that tool
kit, it includes criteria for what to look for in a system that would be 5010
compliant, and there’s also an on-line directory for vendors that AMA and MGMA
members can look at when they go about selecting a new practice management
system.

So we’ve done numerous articles, we’ve done all kinds of announcements and
alerts, we’ve done presentations and webinars. We’ve also been involved with
industry collaboration work. One of the groups that we helped convene is called
the ICD-10 stakeholders’ group, which I’ll talk about again when I talk about
ICD-10. This group has been focused; we started out talking about ICD-10
issues, but more recently we have, in that venue, also talked about 5010
readiness issues, and are again trying to work together in a collaborative
effort for the 5010 requirements and getting ready for the compliance.

Out of that really came that Get Ready 5010 initiative that Anne, I believe
it was, from AHIMA, spoke about in the last panel, and that was an effort that
we at the AMA helped to support as well.

So in January and in May of 2011, we did surveys to try and get at physician
readiness on 5010, and we did this through a web-based tool. It was set to a
sample of 30 thousand physicians. In January we got 407 respondents and 334 in
May, and we recognize that this is a pretty small number of respondents, so
these results may not be representative of all physician practices.

In both surveys 76 percent of the respondents reported being practices with
1 to 5 physicians, and we found this to be very important because the
assumption is always that the smaller practices have fewer resources and are at
higher risk for not being prepared for various deadlines. The survey was
structured where respondents were given six scenarios, and they were told to
pick the one that applied to their practice, and it was sending and receiving
electronically directly to a payor, sending electronically to a billing service
or clearinghouse, that then submits on their behalf; doing paper to a billing
service, doing paper to a clearinghouse. The sixth option was doing paper all
around, and so they actually went to the end of the survey; they didn’t
complete any other questions then.

And by asking those questions, even though they got a different set of
questions, many of them were similar, and so we were able to coordinate those
results and tally those together.

The other piece of data I want to point out – for both surveys, the
majority of practices, it was about – it was in the 40 percent range, send
and receive data electronically to a clearinghouse, and then the second most
common mode was sending and receiving directly with a payor, and that was about
22 or 20 percent in both surveys, so that’s what we saw as common methods that
practices are using.

So now I’m just going to show you the results that really hit at the
implementation milestones. This question is asking how complete is your
analysis of the impact 5010 transactions will have on your practice. Overall,
as you look at these results, what you’re going to see is that the results show
that the physician practices are lagging in their work to prepare for 5010.

In this particular one, you can see that really there was little movement
between the two surveys, and one of the explanations that could be used in
terms of how this question got answered is, in smaller practices they might not
really think about the work they’re doing to prepare for 5010 as an impact
analysis; it might be such a formal process in the smaller practices.

From those that send and receive electronically rather directly with a
payor, with a clearinghouse or with a billing service, we made the assumption
that because they’re doing things electronically out of their office, that they
would need to have some amount of system upgrades done to their system, and the
data that we got back, and it’s really unchanged between the two, shows that
82, 83 percent have not had practice management system upgrades installed. I’ve
been getting some feedback more recently and I’ll touch on this with some
comments I’ve gotten back, that some practices are saying that their vendor or
their clearinghouse is taking care of all of this on their behalf, and they
seem pretty certain that that is going to happen, so I’m a little unclear on
some of this now, because of some of the feedback we’ve gotten, but I still
remain concerned that there are data recording changes that they need to
initiate and they need to know about, and I don’t know if the vendor is
prompting them on what that is, or if they’re going to actually encounter
issues come January because they didn’t get those changes and get all that
ahead of time.

In terms of for those who answer no, their system installation hasn’t
happened yet, this is what you see in terms of when they expect to have their
upgrades installed, and you can see that large number is unknown. And again, we
are concerned that physicians may be relying completely on their clearinghouse
or their billing service to make all the necessary changes to their data and
are not expecting to do anything internally to their systems, and we have done
messaging on this, but we’re concerned that they’re not understanding or
they’re not getting that message.

In terms of internal testing, it’s not surprise, then, to see that a high
number have reported that they have not done internal testing yet, and the
numbers are pretty consistent, then, for external testing, and we’re concerned
that practices may just not be realizing the importance of doing this testing,
and they might just think that they can switch over to the 5010 transactions.
There may also be some lack of awareness on their part that their vendor
clearinghouse is doing this on their behalf, and so they’re not actually doing
anything and so they’re not realizing that it is being done on their part. So
it’s sometimes difficult to understand exactly what’s going on.

Switching gears now just to show you, we’ve done very similar things on our
ICD-10 outreach and education work. Again, we’ve got a website that’s got a
direct link, and that’s where you’ll find all of our materials. We’ve got
education materials, another fact sheet series, we’ve got articles, different
announcements and alerts; again, presentations. We’ve been trying to, any time
we’re doing -– on 5010, we’re including ICD-10 and vice-versa.

This is the ICD-10 stakeholders’ group, and you can see here a lot of the
groups that have been involved in that area also groups that have been here
today and have been testifying, so again, we really pulled this group together
to try to just work together and gain consensus where we could on standard
approaches to addressing different issues that we’ve identified and also just
having consistent messaging, sharing consistent messaging, and we’ve talked
about all kinds of things, outreach efforts, cross-walking, the code freeze
testing; I told you we’ve been talking now about 5010. We’ve also talked about
meaningful use. We’ve had the national coordinator come to our last two
meetings, and so we’ve been dialoguing on other regulatory requirements as
well.

Within the May 2011 survey that we did on 5010, we also added questions on
ICD-10 and we got a total of 370 respondents to this. The questions were very
limited; they’re just very, sort of introductory, about the work on ICD-10.

So the first one was asking about their analysis of the impact ICD-10 will
have on their practice, and you can see that 46 percent responded that they
have not yet started. In terms of completing contacting their vendor about
ICD-10, 41 percent have said they haven’t started contacting their vendors yet
about this. Then for those who answered no, 78 percent responded unknown for
when their upgrades will be installed. The majority have not had their system
upgrades installed, and of those who answered no, 78 percent said unknown for
when they would be installed.

And we ask, if you haven’t yet started your work, when you expect to start,
and you can see that 69 percent answered unknown. And so we see that physicians
appear to be lagging here in their implementation of ICD-10, and we attribute
this likely to their focus on 5010 transactions, CHR, — program, other
regulatory initiatives.

So in terms of issues that we’ve been identifying, one is just overall
awareness issues, and we are concerned on the 5010 side that some physicians
are just either not aware of 5010 overall, or they’re just not understanding
the work that they need to do, and despite consistent messaging, we’re
concerned that some physicians do expect there to be a delay in the deadline,
which is what has happened with other HIPAA deadlines, and so there comes to be
this expectation.

At this time, we would like to ask payors and clearinghouses and vendors to
consider sending messaging. I know we’ve heard, around the table today, that
many have, but sending additional messaging out, either through direct mailings
or other means, to their physician enrollees or customers, just to, again,
address maybe the specific business relationship, business needs, based on that
trading partner agreement, with the physician practices need to be doing.

And we would ask NCVHS to recommend to the Secretary that CMS send similar
reminder letters and add messages to the remittance advices, that would go out
to the physicians enrolled in the Medicare program, and we would also ask that
NCVHS recommend to the Secretary that a close evaluation be done of the
information that’s provided at these hearings, and then look to develop
additional outreach and education to address the gaps that are being identified
here today.

On the ICD-10 side, again, we’re seeing that physicians are expecting a
delay, again despite consistent messaging, and here we would just encourage CMS
to continue all of the outreach and education it’s been doing on the 5010 and
ICD-10, and we’d also like to recommend the creation of an ombudsman office to
respond to physician and other health professional requests for information in
a timely and uniform manner, to aid them with the implementation of 5010 and
ICD-10, to help troubleshoot problems with both.

In terms of risk areas with implementation, we see risks with vendor
readiness, and again, we’ve been talking about this, that physicians are
largely dependent on their vendors in terms of getting their upgrades, and
based on our survey we are concerned that physician practices may not have had
their upgrades installed yet. Another concern that we have is that not all the
industry will be prepared to send and receive the 5010 transactions come
January 1, and again when ICD-10 rolls around, we’re concerned that there will
be cash flow interruptions, transaction issues, as a result of disruptions in
the processing, and so that’s something that we are starting to message on to
physicians to consider things like establishing a line of credit, identifying
the Medicare advance payment policy and what they can do for that, and also
limiting spending in the months prior to the deadline, and then also getting as
many claims as possible submitted prior to the deadline, so that they are sure
that they’re in the pipeline and will be processing.

And so we would ask that – this is something we’ve identified;
Medicare, if they could create the clear guidelines on advance payments and
have that policy made widely available to all physicians, and this was
something that we didn’t see happen in the transition to MPI, and we saw many
physicians who went unpaid by Medicare for months, and it created a real
hardship for them.

Also, again, business impacts of ICD-10 – we’ve talked about this,
you’ve heard this today, that ICD-10 is not just a technical change, that there
are going to be many business impacts, so we’re concerned about the cost and
the resources and the time it’s going to take to do all this work. One of our
large health systems, with physician practices, had provided some feedback to
us, and they made the comment on the scale of ICD-10, and they said, from an IT
perspective, we expect this to be similar to previous large-scale projects.
From a process, training and impact perspective, it will be major, like nothing
experienced before.

This was something, too, in terms of the payment side. This was out of a
report from – showing that Medicare fee for service claims are at a high
risk for impact on claims processing, and so that’s again what we’re concerned
about as well.

We continue to have issues with the HIPAA transactions in terms of a lack of
enforcement of the standards and the code sets and the variability’s with
requirements for the transactions; and again, we would look to CMS to do more
enforcement on the HIPAA transactions and the compliance.

In terms of barriers to implementation, again, cost is always a barrier when
you’re talking about small physician practices and practices in general.
Despite all the promise of administrative simplification, we have yet to see
any type of return on investment from that. Again, we heard earlier about the
SGR, and that’s something that’s near and dear to the AMA’s heart. The
physicians continue to face declining reimbursement. Also, physicians today are
getting overwhelmed by the numerous regulatory requirements which you’ve heard
about as well, and this is where we would recommend that NCVHS recommend to the
Secretary that one entity within the government track the various requirements
and make recommendations to the appropriate overseeing bodies about the
realistic time frames for sequencing and completing all of the incentive and/or
penalty programs and mandates.

And finally, I wanted to leave you with this. I got this back in an e-mail
from a practice administrator, and it really gets to what we believe expresses
the feelings of many physicians, and so I’ll just read parts of this.

“In the midst of rapidly and precipitously declining reimbursement
coupled with the paucity of patients due to lack of insurance or inadequate
insurance, physician’s offices continue to be inundated with very expensive and
technically challenging mandates. After 30 years we are literally on the edge
of a financial precipice, such as we’ve not seen before.

I’m sick of hearing the government’s use of RAC auditors to recoup money as
if we’re all criminals. I’m tired of dealing with the deadlines related to NPI,
PICOS, HIPAA, ePrescribe, EMR, 5010 code set conversion, ICD-10, NDCs, ASP drug
reimbursement methodology, CLIA inspection and mandated workplace
surveys.”

So you can just see the feeling that comes through, and she ended the e-mail
by saying “By taking the time to write this e-mail, I’m now behind in my
work.”

So again, we thank you for taking the time to listen to our concerns, that
the physicians, specifically smaller practices, are facing with the 5010 and
the ICD-10 readiness, and we look forward to working with you on these issues.

DR. WARREN: Our next speaker is Rob Tennant, with the Medical Group
Management Association. Rob?

Agenda Item: Medical Group Management Association, Rob
Tennant

MR. TENNANT: Thank you. I am Rob Tennant, Senior Policy Advisor with Medical
Group Management Association, and on behalf of MGMA and our 22,500 members, I’d
like to thank you for the opportunity to talk today. You’ve heard from a number
of folks about surveys; well, you’re going to hear about one more.

We conducted what we call a learned survey. It’s very recent; it closed on
June 10, so it’s probably as timely as it can be. We got 359 respondents. The
average practice size of the respondents is 22.7 physicians, but also, it
represented practices from as small as a single solo practitioner to groups in
excess of 1 thousand, so a nice cross-section.

What I wanted to do is highlight some of the key results. I have more of the
survey results in the written testimony. The first question, of course, is are
you aware of the 5010 change? And as you can see, a significant number are
either fully aware or substantially aware; I think that’s due to the efforts of
MGMA, AMA, specialty societies and CMS at getting the message; so they’re aware
of things, which is the good news.

The more challenging news, I think, is the communication between the
practice and the practice management system vendor. You can see here that
although the practices have been communicating with their vendor, and we’ve
been offering questions and checklists and things like that to our members, you
can see that the flip side is, they’re not hearing from their vendor.
Thirty-five percent have yet to hear anything from their practice management
system vendor.

One of the things we asked is, will your system require an upgrade? As you
can see here, more than half will need an upgrade, another 4.5 percent will
require a complete replacement – what’s interesting, 29 percent indicated
that no, their current system would be fine. I’m especially concerned about
those folks, because I suspect that they think their system is fine and it’s
not, or else their vendor has told them don’t worry, their system can handle
5010 and of course, we know that’s not the case.

One of the things, sort of the misconceptions in the industry, is that
upgrades in terms of 5010 and later for ICD-10, are covered under the
practice’s maintenance agreement, that there won’t be any additional cost. You
can see here that about 43 percent say there is going to be additional cost,
and a significant number, 22.6 percent, say they don’t know. So we’ve got to
assume some of those will fall into the yes category as well.

But what’s interesting is the costs. The average cost is 16 thousand dollars
per physician for this upgrade or replacement, and again, if you’ve got even a
ten-physician practice, you’re looking at a very substantial amount of money,
which I think is another reason why folks are sort of dragging their heels on
this, because it’s extremely expensive.

Obviously, the key question is, when will you be able to test? And internal
testing, you can see here, 38.2 percent haven’t even scheduled their internal
testing yet. Another 13.8 percent don’t expect to begin testing until the very
end of the year, 2 percent already know they won’t be able to test until after
the compliance date.

In terms of health plans, and here’s where our survey strays a little bit
from what you’ve heard, perhaps, from other folks. What we’re seeing is that 60
percent or so of the plans have not contacted their practices. So even though
we’ve heard around the table that the plans have been doing a lot of outreach,
that’s not filtering down to the practices, so very significant number there.
And of course, that’s reflected in external testing plans as well. We’re
looking at almost 50 percent of respondents saying that testing has not yet
been scheduled with the plans, and that’s major health plans, so that’s not all
the plans, just the major ones.

Now a question that Lorraine wanted to have us address is, of course,
contingency planning, and Nancy alluded to some of the issues here, but
clearly, one of the contingency plans is to push it out to the clearinghouse,
and I think that can work in a lot of cases, but the clearinghouse, as we
learned from Debbie earlier, they can only deal with the data they’re given by
the practices. If the practices don’t give them the data they need to push it
out to the plans, that claim is going to be rejected, either at the
clearinghouse level or eventually at the payroll level.

Also, what’s very interesting, and we heard this as a huge concern, a lot of
folks, almost 37 percent, are saying they’re going to fall back to paying for
claims, and that does nobody any good; it’s going to drive up costs in the
system.

We asked them, of course, what is your sense of urgency – what’s
interesting here, 44 percent answered moderate. I suspect when we redo this
survey, which we probably will toward the end of the fall, that sense of
urgency will have crept up into the extreme, or at least considerable.

So again, just to reiterate a lot of what Nancy said, what we’re hearing
from our guys is, this is a terrible time to be spending money. The economy is
weak, CPO just announced a few days ago that they anticipate the cut in
Medicare to be 29.3 percent, which is significant, as you can imagine.

Not only do they have competing priorities with ACOs, ePrescribe and
meaningful use, but these all require capital investments on the part of that
practice. Even in meaningful use, while we recognize that there’s a 34,000
dollar incentive, it requires a capital investment at the beginning of the
program. The systems have to be purchased. And I think that’s been the focal
point not only of practices, but also of vendors, that the vendors are looking
at meaningful use as a revenue generator, where in many cases, 5010 and ICD-10
are neutral because they’re, at least for some, part of the maintenance
contract.

Obviously, we talked about unfunded mandates, but also, and there’s a
difference between our earlier experience with 4010, because we actually
thought there was going to be some ROI. And we in the industry pushed that
message out, saying boy, all we need to do is go to a standardized claim format
and the world will be wonderful.

It didn’t work out that way, and practices know that. They know that there
is perhaps no ROI with 5010; there’s some people that allude to it, but as
standards are never piloted, we have no idea if it’s going to drive up costs or
is it all just upfront costs for the practices? So they’re dragging their heels
because of that as well. And of course, we’re forced to rely on our practice
management staff and vendors to make this happen.

Similar to what the AMA has done, we have done a lot of outreach. We started
to talk about 5010 when it was just a gleam in Lorraine’s eye. We keep telling
her it’s coming, get ready, and they tell us well, I’m waiting on my vendor. I
think one of the glaring omissions here at this meeting is we don’t have the
vendors at the table, and I can tell you, in the open-ended part of our
questionnaire, we ask for some comments. We’ve heard about some of the largest
national vendors in the nation have not even communicated their 5010 plans to
their customers. So this is a huge issue.

But you can see here, we’ve done articles, blogs, face-to-face conferences.
We have our own web pages devoted both to 5010 and ICD-10. As Nancy said, we’ve
partnered with the AMA on a vendor conference, which we’ll hold probably late
August, early September, strictly focused on vendors, trying to get them to the
table to talk about 5010, their plans, but also talk about the ACA section
Level 4 administrative sample opportunities, to let them know that providers
want to take advantage of these new opportunities, but we need the software to
make that happen.

Finally, just a few recommendations; no surprise here. We need to really
track what’s happening in the industry; particularly on the vendor sides and
the provider side. Not the numbers, but what did they find? What were the
problems identified during the testing day? As well, CMS has done a yeoman’s
jobs in communicating, but they’re hamstrung because of limited resources. That
needs to change. We’ve got 20 to 30 billion allocated for meaningful use, let’s
take a few hundred thousand and push it out toward administrative systems
simplification.

Leverage the many provider meetings that happen in the fall and the winter.
Most of the specialty organizations hold their meetings. Publish a concise and
easy to understand guide to what the data content changes are from 4010 to
5010.

I’m seeing some of the documents on this, God knows we’ve published them,
but they are complicated and difficult to understand. Why not have something
simple that somebody can say oh, I need to change this – it can start to
change the workflow.

Expand the August Medicare testing date and really push it out for the
commercial plans as well. We didn’t hear what the numbers were for the national
testing date; it may have been only two providers that tested with Medicare, I
don’t know, but it was probably not very high, so we need to engage the
commercial plans as well. I know there’s another testing date in August, let’s
think of another date, and we talked about a week, or a month. Really push this
out, especially in the fall.

And we need to start talking about contingency plans. I know we’re not
likely to move the date, but we can certainly talk about data content-driven
contingency plan, but do it now, let’s not wait until December, like we always
do. Look what we did for ePrescribing; they came out with a proposed rule in
June, and the deadline was June 30 for the claims. So we need to avoid that,
let everybody know okay, we’re going to relax the content rules, your claims is
not going to be rejected, let the plans know so they can organize their
adjudications systems.

I will stop there and look forward to questions.

DR. WARREN: Next up is George Arges, from American Hospital Association.

Agenda Item: American Hospital Association, George
Arges

MR. ARGES: I am George Arges, I’m the Senior Director of the Health Data
Management Group at the American Hospital Association, and I would like to
thank the committee on behalf of our more than five thousand member hospitals,
health systems and other health care organizations for the opportunity to
participate in today’s hearing to talk about the implementation progress toward
the updated HIPAA standards, as well as the new ICD-10 code set.

The AHA has been engaging in a discussion that represents a cross-section of
our member hospitals. We pulled together a team to basically obtain input on
the progress that they have made toward implementation, and the issues
surrounding implementation, both toward the new HIPAA standards as well as the
adoption of ICD-10. Fundamentally, our member discussions have included
hospitals ranging in size from small peripheral access hospitals to large,
multi-state and multi-size hospitals, and what I’m going to be describing is
really a series of observations that stem from these conference calls, as well
as e-mail correspondence that we had with our members.

One of the important things that emerged quickly from our discussions has
been really the overlapping IT initiatives. This is something that kept coming
up in our discussions, is the very fact that there are numerous IT initiatives
that are impacting the providers, and these overlapping IT initiatives, such as
stage I meaningful use and the pending stage 2 meaningful use programs, along
with a number of other health reform initiatives such as value-based purchasing
and accountable care organizations, bundled payments and readmissions, are all
influencing their workload, and it is affecting the capital and IT staff that
are already in short supply in terms of how to manage these IT initiatives.
These IT initiatives, when they’re stacked on top of one another, make the task
enormously difficult for them to basically move forward on a lot of the ICD-10
work activity.

So our members are really seeking some breathing room, as well as
leadership, that can provide really a thoughtful, coordinated pathway to help
them manage all of these important IT initiatives, and we can close, I think,
in my testimony, a graphic depicting these overlapping IT initiatives in a
timeline. Nevertheless, our members support the adoption of ICD-10, but
recognize that it’s not an easy task, that it becomes even more complicated as
other overlapping IT initiatives are introduced.

Because there is a lack of coordination among the IT initiatives, it really
results in them diluting their resources as part of the process, so they can’t
effectively implement ICD-10 with the type of resources full force as part of
this process. So the first step, we suggest delaying the start of stage 2
meaningful use for the EHR program to no sooner than fiscal year 2014, and only
after at least 75 percent of all eligible hospitals and physicians or
professionals have successfully achieved stage 1, but not before I-10
implementation.

So the issue of resources and testing is a big, big issue for our member
hospitals. They indicated that while they completed their I-10 assessment,
they’ve also mentioned that the cost for doing so was much larger than they had
anticipated, and that the added costs associated with the assessment really
placed further strain on their ability to find additional funds to carry out
the remaining work. But more importantly, they foresee manpower shortages to
carry out the essential system changes down the road; the training and testing
associated with the implementation phase of ICD-10.

Most hospitals mention that their own transition effort to the HIPAA Version
5010 is on track. They are, however, concerned that the testing phase is
unfolding more slowly than they expected. They believe that the testing for
5010 is at least six months behind the original timeline, and that testing
delays really have the effect of encroaching on the next phase of their ICD-10
implementation; namely, the installation of system changes.

Many indicated that they were encouraged by the Center for Medicare and
Medicaid Services national data testing, and hoped that commercial plans, as
well as Medicaid plans, would also provide similar testing days. A growing
concern that they have is that the state Medicaid programs seem to be also
falling behind. We’ve heard from some of our members indicating that
California, Illinois, New York and Pennsylvania, just to name a few, may not be
ready to handle the newer version of the 5010 by January 2012 or even use
ICD-10 codes by October 2013, and this is particularly troublesome because it
would result in dual reporting of ICD-9 and ICD-10, and these types of delays,
in our opinion, are unacceptable and really add significant operational costs
and an administrative burden to an already costly undertaking.

CMS could potentially facilitate our understanding of Medicaid readiness
status by surveying the states to engage their readiness for 5010 and ICD-10
progress, as well as undertaking national data testing for the state Medicaid
programs.

One of the things that we want to emphasize here is about proceeding
cautiously. I think the yellow caution light is flashing at this point in time,
and the combined fact of limited staff, costly conversion, overlapping IT
initiatives, delays in 5010 testing, as well as delays among the Medicaid
programs, all basically have caused the members to question whether they can
meet the October 1, 2013 start date for ICD-2010.

Unless there is an orderly transition to 5010 by January 2012, then a
one-year extension for I-10 must be considered to provide the least disruptive
and costly pathway. Staying with the scheduled October 1, 2013 day could prove
calamitous if there are not sufficient resources, adequate education, and
testing with trading partners.

Clearly, preparation for establishing a contingency plan would be needed to
prevent payment disruptions. But if there are gaps in ICD-10 readiness, a
contingency plan by itself would not likely include the added administrative
costs of dual processing of I-9 and I-10 is a requirement. While some have
suggested a strategy to utilize the GEMS as a tool to convert I-9 to I-10 and
vice versa, it’s important to note that the GEMS were never designed for this
purpose; they were intended as an aid to help users translate the internal
system logic to handle ICD-10 codes. They’re not really designed as a plug-in
module to crosswalk or convert the codes.

While the GEMS identify 90 percent of the matching codes, there remains 10
percent that do not have a corresponding code, and that is precisely why more
time was given for the adoption of I-10 in the final rules. Nevertheless,
Version 5010 requires additional time to test or correct problems. It will take
away from the remaining time needed to prepare for I-10 implementation. And it
is an issue of finding the resources to carry out ICD-10. Hospitals are being
asked to reach out to the physician community now to also educate them on I-10
changes. AHA has been actively engaged in providing the variety of ICD-10
educational programs, both to inform our members about upcoming changes and
challenges. In fact, in 2009 we did a CEO briefing that outlined different
phases of implementation to achieve implementation of I-10.

Since that time we’ve had a series of ongoing audio and outside programs
along with member advisories and articles. Basically our CEO briefing described
various limitations stages and the importance of creating a cross-functional
team. While many have completed the first phase of the assessment, a few of our
members have moved on to the next phase, the implementation of system changes.

When we asked them the reasons for the delay, we heard once again about
overlapping IT initiatives and the competing resource issues that need to be
tackled. Since – in fact, some indicated that once they completed their
ICD -– ICD assessment of the changes needed, they could not add the value
whether their vendor, solution or product was available, since many of the
vendor solutions also seemed to be behind. And this may be a signal, too, that
maybe the vendors are also struggling with the resource issues associated with
overlapping IT initiatives. It is not uncommon for a hospital to have more than
50 different vendor products, all of which have to be tested for their ICD-10
solution prior to their installation.

In summary, AHA supports the adoption of ICD-10, and sees it as an important
first step. AHA recommends that the Secretary and the Office of e-Health
Standards and Services work with the provider community to coordinate the
overlapping IT initiatives to make certain that a manageable time line is one
that is sensitive to the resource limitations for the hospital community as
well as others, and of course the AHA IT policy committee’s recommendation,
just recently issued, that a one-year delay to stage 2 on meaningful use begin
no sooner than fiscal year 2014, but we would like to add that, again, at least
75 percent of all eligible hospitals and physician professionals have
successfully achieved stage 1 no earlier than I-10 implementation.

We also want the NCVHS, CMS, OESS to closely monitor the outcomes of version
5010 testing, and to urge the Medicaid plans, as well as the commercial plans,
to begin a similar day of testing, or days of testing, and the other issue is
to hopefully conduct a survey about the readiness from the different sectors
within the health care community, to help to gauge their readiness with 5010
and I-10. Again, try to avoid dual processing of I-9 and I-10 codes, and to
think about mapping out a strategy for a possible one-year extension on
implementation of I-10 and –- processing and a longer term contingency
plan.

Thank you, and I’ll take questions later on.

DR. WARREN: Thank you, George. Next is Annette Gabel from Medco and NCPDP,
talking about pharmacy.

Agenda Item: Pharmacy, Annette Gabel

MS. GABEL: I was going to go through the pharmacy industry survey first, but
since we had the Medco slides up here, I’ll go through Medco first.

With the presentation that I provided, I also provided a fact sheet on Medco
Health Solutions. I just want to mention a couple of items, and basically, that
is that when I present my testimony today, I’m going to be providing
information on Medco acting as the prescription benefit manager, Accredo, which
is our specialty pharmacy, Liberty, who is a diabetic care company, and our
mail service pharmacy. In addition, I just want to mention that in 2010, Medco
processed 740 million prescriptions.

Okay, so on the telecommunications standard, we did complete our impact
assessment. It was completed using internal resources. The key issues that were
found during the impact assessment included that we had underestimated the
resources that we were going to need to implement the standard, that we had
business requirements change after we did our impact assessment, that in some
cases, although we thought we really understood the standards, there were some
questions that came up as we were writing the business requirements, or doing
the development, and that through this process, because we had started so early
that there were transition issues that were being identified by the industry
which then caused us to have to go back and make some changes.

So we followed the guidelines and started our external testing in January of
2011. Medco started, initially, the PBM. We had our mail service pharmacy,
Accredo and Liberty, scheduled at the same time, so I was monitoring each of
the entities to make sure that they were complying with the regulations. As we
started to test in production, we identified some issues that we had not found
when we were doing internal testing. They were related to coordination of
benefit claims and the compound claims. We also found some issues on our
client’s side for their benefit set-up. We had created new setups as they
related to compound processing and coordination of benefits, and we started to
test with the pharmacies we realized that we had some issues with the way the
client set up their benefits.

Our mail service pharmacy had actually started testing with just the Medco
PBM, because there are other trading partners who have not been ready to test
with them yet. That was in the January time frame. Our two other pharmacies,
Accredo and Liberty, had delayed their testing until February and March. They
were waiting on the software; in some instances they rely on software vendors,
and they had not deployed their software yet. And then in addition to that,
they were waiting for willing trading partners to test with.

So as we were doing our trading partner testing, we started in January, as I
had said. We are at the point now where we have only completed five percent of
our certification testing. I have statistics up here that we had completed 47
out of 200 trading partners; well we have another one, so updated today, we’re
now up to 48. Our Medco mail service pharmacy, as I said earlier, had completed
the testing with Medco the PBM, and now they’re in the process of testing with
one additional trading partner, who since then has been able to test with them.

Liberty has also tested with Medco, and Liberty did some testing with
Medicare on the D.0 standard. Accredo is in the process of testing with two
other trading partners, but that only represents 2 percent of their trading
partners.

Medco has been accepting D.0 claims in production since January 1 of 2011.
We have a situation; we’re a chain pharmacy, so we had a number of chains that
had been submitting claims to us in January; they actually stopped submitting
D.0 because they ran into issues with the Medicaids, so because the Medicaids
weren’t ready to accept the D.0 standard, and we do a lot of coordination of
benefit claims for Medicare, that they had to pull out their code and go back
to 5.1 until they were able to make some changes that would allow them to
submit the Medicaid COB claims in the old format.

So we expect that those chains that pulled out will start again. We’ve seen
that one started again this week, and they are sending a considerable amount of
claims in D.0, but there are some large chains that because of that issue, said
they are going to wait until July, August or September before they start
submitting claims.

As I mentioned earlier, we found some issues in production that we had not
found in test, actually, I said we found issues when we were external testing,
so in addition to finding those issues, when we actually started to get claims
in production, we found some additional issues with the pharmacies submitting
claims to us, so we’ve been making changes as we’ve uncovered those issues.

Our mail service pharmacy has only been submitting claims to Medco, the PBM,
since March. None of their other trading partners are ready to take claims in
production. And as far as Accredo and Liberty go, they are not submitting
claims in production because none of their trading partners are ready. Accredo
expects to start submitting sometime in July, according to the information that
they’ve been provided, and Liberty says they’re most likely going to wait until
third or fourth quarter.

So what I wanted to point out with the D.0 standard before I move on to the
other transactions, is that as my role at Medco, I’m responsible for compliance
for transaction standards. I was also the SNIP Committee Chair, so when we get
to the NCPAP survey – I made sure my company followed the timeline. So I
had them do everything according to the regulation, according to the NCPDP
timeline, and what happened with that is that we were way ahead of everyone
else. We still are way ahead of everyone else.

I think that’s great, because we were able to do a lot of our external
testing early, and because we’re actually transacting in production, we are
finding issues that some of the other PBM’s won’t find until they actually
start conducting claims of production. That puts us in a better position
because we won’t have issues closer to the end of the year.

One of the things that we were hoping would happen is that we would be able
to get the majority of our trading partners transitioned over to their D.0
standard in the July 2011 time frame. And then we can concentrate on following
up with the smaller vendors and pharmacies to make sure that we were able to
get them transitioned over to the standard by the end of the year.

Now that’s not happening, because a lot of our trading partners were not
ready in that time frame.

So now I’ll move on to the Medicaid segregation standard, and I know someone
had asked about this before, and there was some discussion with some of the
state Medicaid, so Medco does process Medicaid segregation claims for a lot of
the state Medicaids. We completed our impact assessment and the two issues that
we found there was some confusion between the cross-walk. The 5.1 standard was
used for Medicaid segregation, even though it wasn’t required, and there was
some changes that had to occur with the 5.1 standard in order to process the
segregation claims as required by the Medicaid processors.

So when we were moving from the 5.1 sort of proprietary format that we had
to the 3.0, we had some issues with cross walking those two formats. We are
actually ready to conduct transactions in production, although we don’t have
anyone to conduct with at the present moment. We have been testing with three
of our trading partners, but that represents only 50 percent of our trading
partners, which is a better percent than what we’re doing on the D.0 side.

We are expecting, based on the information that we’re receiving from our
trading partners, that we will start using the transaction introduction in
July, and we’re seeing that there really is no urgency in the industry, because
everyone is waiting to finish their D.0 implementation before they go to the
Medicaid segregation standard. As far as the X12 standards, we completed our
impact assessment. We found issues when we mapped from the 4010 to the 5010 and
again we had come up with insufficient resources. On the 270/271, Medco is
completely in production for that standard, so we use that for ePrescribing,
and all of our transactions right now are coming in 5010.

As far as the 834, we have completed external testing with 60 percent of our
trading partners, and we are currently conducting production transactions with
50 percent of those trading partners. On the 835, we are ready to external test
and we are ready to conduct the transactions in production, but we currently
have no trading partners to do either one of those with. Our mail service
pharmacy has completed their development and Accredo is in the process of
testing with one of their trading partners and Liberty has completed their
development.

On the 837 5010, Accredo started external testing in May, and Liberty
started their external testing in April. We have been communicating outward
with all of our clients and we have been communicating with our pharmacy
providers every other month, on what the requirements are for the standards,
telling them that they have to be transitioned by the end of the year, pointing
them to where our payor sheets are. We’ve been providing a lot of
communication, trying to get the word out there that we need them to move to
the new standards.

As far as ICD-10 goes, we have not completed our impact assessment. None of
the entities under Medco has. We’re working on a team, and everyone is working
together, and right now we are in the business planning stage. You had asked
about our strategy for processing ICD-10 codes after October 1, so right now
our plan is that we will start using the codes on the day of service as
required, but our history files are going to remain with the ICD-9 codes.

On the Liberty and Accredo side, they use ICD-10 codes much more than on the
mail service pharmacy and on Medco, the PBM side, because they submit Part B
claims, so they have a little bit more to do and they’re expecting to start
their outreach to obtain the ICD-10 codes prior to the October 1, 2013 date,
and they’re going to develop testing for their entire organization because of
that impact, and their timeline includes internal testing the first quarter of
2013 and external testing to occur in the second quarter.

And I have NCPDP to go through – do I get an extra set of time for
that? Okay, good.

So let me just finish up with – as far as the ICD-10 project, I just
wanted to mention that we did start our project team in 2010, and we began
engaging internal resources that we thought would be impacted by updating the
code sets, and as I said, Liberty and Accredo are more impacted with those than
Medco is, but we were having trouble getting the company’s attention, so this
year we have a team that’s completely supported by the Company and they are
concentrating on this requirement, but unfortunately, some of our subject
matter experts that are working on ICD-10 were also our subject matter experts
when we were dealing with the business planning on the D.0 standard, so
sometimes they get pulled out of ICD-10 to go and work on some of the issues
that come up with D.0.

So that completed my presentation on where Medco is, and I’ll be happy to
answer questions later.

So now let’s go to the survey that we conducted. NCPDP, for those of you
that are new with NCVHS, standards for National Council for Prescription Drug
Programs. They’re an ANSI-accredited standard development organization and they
created standards for the pharmacy industry. We have a committee, as I
mentioned before – SNIP, which stands for Strategic National
Implementation Process. We created this with the last round of HIPAA, and when
we were asked to come and testify for NCVHS, we created a survey and we sent
that survey out and I’m about to provide those results.

So we had total survey response of 91 entities, and we asked that when they
respond to the survey, that they only did one per company, so even though that
number sounds small, it does represent 19 different companies.

As you can see, that’s how the survey responses were broken down. I don’t
think you’re going to find anything different in here than what you’ve heard
all day today, even though pharmacy should be more ahead of – we usually
typically are ahead of the medical industry, but I don’t know that we typically
are with these results. But when we asked where they were in their impact
assessment, we had 42 percent say that they had completed and 46 percent w4ere
still in the process of completing, which is kind of scary. Of the companies
completing their impact assessment, 80 percent used internal resources, and
you’ll see that, that’s the case throughout the survey that most of the
pharmacy industry uses internal resources to do impact assessment.

So when we asked them what the key issues were found when they were doing
their impact assessment, we had 59 percent say that they were resources such as
financial and full-time employees, 32 percent said data sources such as
reference files from external entities, 29 percent said deployment, and
deployment means that they were waiting for their software vendors to deploy
the software, and 29 percent said that they had issues, when they were moving
from 5.1 to D.0, there were some cross walking issues between the two
standards.

We asked them what stage of implementation they were in, and we heard that
17 percent were in transition to full compliance, 40 percent were still in
development and 31 percent were in an either informal or formal testing stage.
So we asked them what percent of external trading partners had they tested
with, and 89 percent said that they had started testing with 40 percent or less
of their trading partners and that some of the obstacles that they were seeing
was that they were waiting on software from vendors, they were waiting on the
trading partners, and in 30 percent of the situations, development still was
not complete.

So when we heard that, we went back and said okay, when will you be ready to
exchange production claims with your external trading partners? Well
fortunately, a high percent, 60 percent said that they would be ready to do
that by October 30 of 2011. When we asked what percentage of trading partners
they were currently exchanging production claims with, we found that 50 percent
said that they were exchanging a minimum of 10 percent of their transactions.
So although we have a high number of respondents saying that they are doing
production claims, they are not doing that many of them.

So when we asked why they were not doing that many in productions, they
indicated that their trading partners weren’t ready, and in 42 percent of the
cases, they said that their production environment was not ready yet to conduct
in production, so while they’re ready to do testing, they’re not ready to do
production claims.

So now we’ll move on to the Medicaid subrogation standard. We had 68
responses, and you could see the breakdown of there they came from. Pharmacies
don’t exchange Medicaid subrogation, so that’s why they’re not included here.
When we asked them if they had completed their impact assessment, we had 39
percent saying they had completed, but 50 percent were still in the process of
completing. And they basically told us that they used internal resources, and
that the key issue they found during the assessment stage was that they were
underestimated on their resources.

When we asked them about the stage of implementation they were currently
working on, we had 15 percent saying that they were in transition to full
compliance, 68 percent were still in development and testing and 17 percent
were still in the business staging plan.

When we asked what percentage of external trading partners they were
currently testing with, or had completed testing, we had 84 percent say that
they had started testing with 10 percent or less of their trading partners;
again, the same reasons, waiting on trading partners and development wasn’t
complete. When we asked when they would be exchanging production claims with
their external trading partners, only 21 percent said they could be ready to do
that by September 30 of 2011, so the majority are going to be late in fourth
quarter.

When we asked who was actually trading production claims, we got 8 percent
saying that they were exchanging 50 percent of their transactions in
production. So there’s a small percent of the industry that’s actually
conducting a large majority of their transactions in 3.0.

For those that said they were exchanging less than 50 percent, same issues
as trading partners and 27 percent that production environment wasn’t ready

So now I move on to the X12 results. We had 59 people responding. Again,
here’s the break down. Pharmacy is involved in this part of the survey. When we
asked them about impact assessment, we found that 31 percent had completed, 37
percent were still in the process of completing. We asked about completing
their impact assessment; again, internal resources was very high on the
percentage, and when we asked about the impact assessment, they had the
financial impact with the resources again and then 60 percent said they had
issues with mapping from the 4010 A1 to the 5010.

When we asked what stage of implementation their organization was currently
working on, they only had 2 percent say they were in full use of the upgraded
standard, 15 percent were in transition to full compliance, 66 percent were
still in development and some form of formal and informal testing, and believe
it or not, there was 17 percent that were still in the business planning stage.

So we asked about their external testing, and we had 17 percent say that
they had started testing with 20 percent of their trading partners and that
again, two of the reasons that we’ve been talking about, development and
waiting on their trading partners. When we asked when they would be ready to
exchange production claims, 58 percent said they would be ready by October 31,
again, which means the remainder will not be ready until the fourth quarter of
this year.

When we asked about what percent they were currently exchanging production
claims with their trading partners, 11 percent said that they were exchanging
40 percent of their transactions in production, and then when we asked about
why the percentage was so low, we again heard that they were waiting on trading
partners and that their production environment wasn’t ready.

Moving on to the 834, we had 15 percent of our respondents indicating that
they have started testing with 60 percent of their trading partners, and that
the obstacles that were keeping them from testing included trading partners,
development not complete, and limited resources.

Again, when we asked about when they would be ready to exchange production
files, we were told that 30 percent would be ready to exchange by October 30 of
2011. I think that that percent on this is low because not a lot of the
industry is doing exchange of 834. And when we asked what percentage they were
currently exchanging 40 percent of their transactions in productions. And then
again, major obstacles – same reasons, trading partner and production
environment not complete.

Moving on to the 271, what percentage of external trading partner testing
have you completed? Nineteen percent said they had started with 40 percent or
more of their trading partners; same reasons for obstacles. When will you
exchange production transactions with your external trading partners, we had 40
percent saying they would be ready by October 30 or 2011; again, in this case
we think that the percent might be low because of the number of entities that
are exchanging the 270/271 for ePrescribing.

And then when we asked about who was conducting production transactions, 3
percent responded that they were exchanging with 70 percent of their trading
partners, and when we asked about the major obstacles, same as we’ve been
discussing.

Moving on to ICD-10, we had a total of 56 responses; again, you can see the
breakdown. When we asked about what stage of impact assessment they were in, we
had 9 percent saying they had completed their impact assessment, but the
majority, 52 percent, are still in the process of completing. Again, they were
using internal resources to complete that assessment, and for those that had
completed their assessment, they said that the majority of the issue was again
around resources.

As you can see from the percentages, the majority of the organizations are
still in the business planning stage, and I’m not sure who responded to this or
if it was an error, but 4 percent said they were actually doing external
testing with trading partners; I’d like to know who they were, but I think they
might have answered the question incorrectly.

So when we go to what will their strategy be for processing ICD-10 codes
after October 1st, this is one of the questions you had asked –
16 percent said they will obtain or re-obtain the information from the
prescriber, 46 percent said they would start using ICD-10 codes with dates of
service on October 1, and leave the history files using the ICD-9 code.
Eighteen percent said they would use a cross walk on a limited basis. Thirteen
percent, they said they would use a cross walk or mapping tools prior to
October 1, and then they would use that to convert their existing history
files.

Four percent said they will use compendium mapping of ICD-10 codes to their
proprietary codes, and 3 percent said they will use GEMS as a starting point in
developing a cross walk.

When we asked the question specifically for the Pharmacy providers that
needed to obtain the ICD-10 codes for Medicare Part B, Medicaid D,M.E and
specialty pharmacy transactions, the responses as to how they were going to
obtain the codes came back that 29 percent had not determined. Six percent said
they would reach out to the prescriber part of the October 1 date, 7 percent
said that they would reach out to the prescriber at the time of service, and
because there were retail pharmacies responding to this, a lot were saying it
was not applicable.

We asked the question if you are a pharmacy provider, what is your plan for
obtaining the appropriate ICD-10 codes for all other prescription drug
transactions? Only 26 percent said to be determined and the remainder said that
it was not applicable; there was only 9 percent that said that they would reach
out to the prescriber at the time of service.

DR. WARREN: We’re running out of time.

MS. GABEL: Okay. I don’t need to go through the rest of this. This is just
about developing and training, and then the only other item that I wanted to
mention is that if you go to this slide here, is that NCPDP SNIP Committee has
been doing a lot of industry awareness and training, and we listed all of the
different avenues of training that we have put out for the industry.

DR. WARREN: To let everybody know, Laurie Darst from Mayo is going to be
submitting written testimony, so Donald, you are our last testifier of the day,
from LabCorp and ACLA.

Agenda Item: Labs-LabCorp/ACLA, Donald Horton

MR. HORTON: My name is Donald Horton. I’m Vice President of Public Policy
and Advocacy for LabCorp. I also serve as Chairman for the ACLA ICD-10 work
group. I’d like to thank the members of the subcommittee and staff for the
opportunity to testify today on behalf of both the American Clinical Laboratory
Association and LabCorp, regarding the issues faced by clinical and anatomic
pathology laboratories in the implementing of Version 5010 of the HIPAA
standard transactions and the ICD-10 CM code set.

ACLA represents national, regional and local laboratories. Its members play
a critical role in our health care system, providing accurate and timely,
clinical and anatomical pathology laboratory test results, which influence over
70 percent of all medical decisions.

It’s our view that the health care industry is generally behind schedule in
the transition to Version 5010, and timely ICD-10 CM compliance is in jeopardy
as a result of that delay, as well as other factors. – direct providers,
clinical and anatomical laboratories are particularly vulnerable to cash flow
interruption in the event that ordering providers, payors or clearinghouses are
not ready for either conversion. A recent ACLA survey indicating significant
ongoing ICD-9-CM error and omission rates suggests that the negative impact of
ICD-10 CM on clinical and anatomic pathology laboratory reimbursement could be
significant unless the conversion process speeds up and regulatory solutions
are adopted to prevent labs from being penalized for failure to submit
diagnosis data that is beyond their control.

While LabCorp’s experience to date in implementation of the Version
5010/837P claim transaction and 835 remittance transaction does not represent
the experience of all ACLA member laboratories, it is illustrative of the
issues that many ACLA member laboratories are facing.

LabCorp uses the 837P transaction with 846 different public and private
payor groups, including Medicare, Medicaid and Managed Care plans. Due to a
lack of communication from most of its trading partners, LabCorp is currently
reaching out to nearly 700 payors on a weekly basis to determine when testing
can begin.

With nearly half of the testing year behind us, payors that are ready are
experiencing a backlog of providers that are ready as well. To handle the
backlog, payors are creating waiting lists, however there’s no way for a
provider to know where it is on the waiting list or to plan for an estimated
testing date.

Medicare represents 29 percent of LabCorp’s third party revenue. To date,
six of the 48 Medicare payors representing 13 percent of LabCorp’s third party
revenue are not ready to test. MAC jurisdiction transitions are impacting five
of those payers. LabCorp is actively testing the Version 5010 837P with 17
Medicare payers representing 15 percent of LabCorp’s third party revenue, and
there are 25 Medicare payers in line for testing, that represent 1 percent of
third party revenue.

Of the top ten Medicare payers for LabCorp, four, representing 14 percent of
third party revenue, are either not ready to test or are experiencing system
issues. Medicaid represents 8 percent of LabCorp’s third party revenues to 49
payers. While Georgia Medicaid is the first payer to have promoted LabCorp to
production status, eight of LabCorp’s top ten Medicaid payors representing 6.2
percent of third party revenue are not ready to test, and have not provided
estimated dates for testing.

Managed Care represents 63 percent of LabCorp’s third party revenue through
749 payors. LabCorp is actively testing 32 payors that represent 33 percent of
third party revenue. Another 18 payors representing less than one percent of
third party revenue are currently in line for testing.

One payer representing three percent of third party revenue is ready, but
his clearinghouse is not. Another large payer will not allow LabCorp to move to
production until it is certified by all of its different subsidiary
adjudication systems, because the payer does not have the ability to convert
claims from one format to another internally.

Among the top ten managed care payers, 7 payers representing 29 percent of
third party revenue are actively testing with LabCorp, three payers in the top
ten representing 6 percent of third party revenue are not ready to test, and of
those three, only one has an estimated testing date.

Most payers will not test the Version 5010 835 remittance transaction until
the testing for the Version 5010 837P is complete. LabCorp has tested the
Version 5010 835 remittance transaction with a couple of payers that represent
less than 1 percent of third party revenue. Only 46 percent of LabCorp’s third
party revenue is currently posted through an 835 remittance transaction.
Several payors that do not currently use the Version 4010 835 remittance
transaction responded to LabCorp’s request to test Version 5010 by asking
LabCorp to test the 4010 Version. In an effort to increase the revenue posted
electronically, LabCorp is moving forward with testing the Version 4010 835
remittance transaction with these payers.

In the interest of administrative simplification, the ACLA urges NCVHS to
recommend to HHS the establishment of a certification program for validating
conversion to new versions of the HIPAA standard transactions. Designated
Standards Maintenance Organizations can evaluate candidate entities to serve as
the certifying body and to assure that its certification program would
appropriately validate the published standards. Payers and providers can submit
test files to this entity for certification. Once certified, the covered
entity’s trading partners would be required to accept the new version of the
transaction.

This proposal has several advantages. Payers and providers would only have
to test with one entity instead of every trading partner. The certifying body
could maintain a list of certified organizations, which could be used to assess
industry readiness. The certification process would encourage the adoption of
the transactions without payer or provider’s special request due to system
challenges. In addition, the certification process can be funded with the
savings that your organization would save under the streamlined approach.

In our December 2009 testimony to the Subcommittee, we noted that labs were
understandably concerned about potential impact of ICD-10 CM because after more
than 30 years of experience with ICD-9 CM, insufficient diagnosis coding data
from ordering providers remains the single biggest billing problem for labs.

A recent survey of ACLA member laboratories confirmed that errors and
omissions in ICD-9 CM diagnosis data from ordering providers continue to result
in significant front end claims suspensions, rejections or denial of claims due
to inadequate diagnosis information, and wasted resources devoted to following
up with the ordering provider to obtain necessary diagnosis data that should
have been submitted with the test order. For the six-month period of July 2010
through December 2010, the survey asked ACLA member laboratories to provide
average monthly third party billing price per session, average monthly
adjustment due to unresolved diagnosis errors, current full-time employees 100
percent dedicated to resolving diagnosis errors, estimated monthly staff hours
spent resolving diagnosis errors and average FDA annual salary.

Diagnosis errors were defined as including receiving merited diagnoses,
invalid diagnosis codes, diagnosis codes not at the highest level of
specificity, diagnosis codes that do not support medical necessity and omission
of diagnosis. Based on the data submitted in response to the survey, 9 percent
of average monthly third party billing sessions contained diagnosis errors,
placing at risk 37,671,067 dollars in average monthly revenue. Of that amount,
on average, 17.3 percent, or 6,529,237 dollars remained uncollectable after
follow-up with ordering providers, each month, and was written off.

On average, 201 FTEs were fully dedicated to resolving diagnosis errors,
spending 31,681 monthly staff hours in that effort. The average annual expense
of FTEs dedicated 100 percent to resolving diagnosis errors was 6,902,340
dollars. Our experience with ICD-9 CM makes it clear that provider education
and familiarity with the code set, while important, will not be sufficient to
avoid even greater errors and omissions in provider submission of ICD-10 CM
diagnosis data to clinical and anatomic pathology laboratories.

A primary source of this issue is the clinical laboratories which cannot
render or determine diagnosis codes for clinical laboratory testing themselves,
are typically required, under HIPAA and payer rules, to submit diagnosis codes
in HIPAA standard transactions, under circumstances in which there appears to
be no requirement for referring providers to submit such codes to the
laboratory. As a result, they are often not submitted by referring providers.
Where the law currently requires preferring providers to submit diagnosis codes
to the laboratory at the time of the test order when needed for payment, such
as the Medicare billing rule at 42 USC Section 1395 UP4, the law has been
narrowly interpreted by CMS to apply only to services covered by a national
government’s decision or local government’s decision under Medicare, and is
rarely, if ever, enforced.

These regulatory gaps between diagnosis code submission requirements for
labs and ordering providers are problematic. Clinical laboratories, providers,
health plans and patients today using an ICD-9 CM code set with which the
health care industry is familiar. If not resolved, they could become much
greater problems as the industry transitions to the new ICD-10 CM code set.

We urge NCVHS to recommend to HHS that it issue guidance for re-interpreting
42 USC Section 1395 UP4 to mean that referring providers must submit to the
laboratory, at the time the test is ordered, the diagnosis data needed by the
laboratory for payment, whether or not the test is the subject of an NCD or
LCD. The diagnosis data needed by the laboratory for payment consists of the
valid diagnosis codes at the highest level of specificity. We urge private
payers to adopt the same position without delay. In addition, we urge NCVHS to
recommend to HHS that it issue guidance to clarify the circumstances under
which a laboratory may translate or crosswalk the ICD-9 CM code received from
an ordering provider to one or more ICD-10 CM codes for submission to a payer.

We commend the Subcommittee for holding hearings on the issues related to
paying for and implementation of Version 5010 and ICD-10. We encourage the
subcommittee to continue to monitor closely the progress being made on the
implementation of these standards. We ask the subcommittee to carefully
consider the issues faced by clinical and anatomic pathology laboratories in
these transitions, as well as the solutions we suggested, and to make
appropriate recommendations for HHS to take action to address these issues
accordingly, in a prompt and effective manner.

Thank you again for the opportunity to testify, and I look forward to your
questions.

Agenda Item: Questions by the Subcommittee

DR. WARREN: Thank you, especially for the specific data on FTEs and cost. So
we are now opening up to questions by the committee. Mike has one, Ray and
Walter.

DR. FITZMAURICE: This is for Donald. It’s a lack of understanding on my part
– a doctor orders a lab test for me and it goes to the laboratory. Does
the doctor put the diagnosis code of what he wants to suspect or rule out, but
there’s nothing coming in. Does the laboratory, on the basis of the result of
the test, put a diagnosis code in and send it back to the doctor? Who puts the
code on?

MR. HORTON: The goal is for the ordering physician to do that. We had been
instructed by the office of the Inspector General of HHS that clinical
laboratories are prohibited from insertion their own diagnosis code when one is
not provided by the ordering provider.

DR. FITZMAURICE: So in the case it comes up blank, you call up the doctor’s
office and say hey, I need the diagnosis code, and so that gives you a little
more hassle to process that order.

Secondly, I guess for Nancy and Rob, is it reasonable or unreasonable for
physicians to expect that their billing service, their practice management
systems, their clearinghouses or other vendor will handle the move to 5010 and
tell them, the physician, here’s the data you need to supply to me to make this
compliant with 5010. I can imagine a physician taking care of patients doesn’t
want to be bothered with it, but yet there comes a point when he or she says, I
need to get paid, and so if I push the problem to the practice management
system, the billing service, they should then push it back to me, what it needs
to take for my claims in general to be paid. Is that unreasonable for a
physician to think like that?

MS. SPECTOR: One of the problems that I see when it comes to practices;
there isn’t a one size fits all or one approach works for all. I think that
some vendor clearinghouse relationships with practices, they maybe have a
better relationship and they’re supplying information that says hey, you know
you can’t use a PO Box as a billing provider address, what address do you want
me to put there, I’m going to put the PO Box in the Pay To if you still want
checks going to the PO Box – and there can be that conversation, so there
isn’t maybe as much that individual practice has to ultimately change,
especially if you’re working with a billing service; I can see that
relationship happening a lot more.

My concern is that physicians maybe aren’t just – they’re not getting
that communication, they’re not really aware of what’s going on, and maybe the
vendors aren’t even really thinking down the road on behalf of the physicians,
they’re just trying to get done what they need to get done, and so they’re not
really thinking, then, on behalf of what the physicians’ needs are.

Two things there: one is, we’ve been trying to message and make it a
stronger message, even if you’re thinking your vendor, your clearinghouse, is
going to take care of this, this is your payment, this is your revenue, and if
you’re not getting paid, your clearinghouse or your vendor isn’t going to step
in and provide you payments until everything gets worked out. So we’re really
trying to make sure they understand that they need for their practice to know
what’s going on, but on the flip side too, I had a physician get in touch with
me, and wanted just to talk to me directly after he got a communication, it was
about the CMS national test day; we had forwarded that out. He called me up and
started to kind of yell at me, saying that I was unnecessarily alarming
physicians about 5010, there was absolutely nothing that they needed to do
– he had, in an e-mail from his vendor, that his vendor and clearinghouse
were taking care of everything, and there was absolutely nothing that he had to
do.

And I was just saying well that’s great for you, and wanted to say well,
talk to me in January and let’s see how things go for you, because the things
like the PO Box, accept –, there are things in there, they may be small
changes, but when you start to add them together, or if a practice management
system has different responses, indicators hard coded, and these codes are now
eliminated, I have concerns about all.

MR. TENNANT: The thing I’d add is if there is no two providers the same,
then the same applies to vendors. A lot of the smaller practices rely on very
small, maybe local or regional, vendors. Some of them really don’t have any
clue of what’s happening. I expect the largest vendors. When we tap into our —
we find there are hundreds and hundreds of vendors, and there’s the top ten
that have about 60 percent of the marketplace; they’ll be the ones that most
likely will push out education and let the practices know, it’s the smaller
ones that service the smaller providers and the rural guys, I think, that I
have the most concern about.

DR. FITZMAURICE: It sounds like a market opportunity for them. George,
hospitals are different?

MR. ARGES: Well hospitals are different – I mean, normally they’d have
their own IT staff that would handle that. They need to be aware of the
changes, but they don’t see it being too difficult to make. Their biggest
concern right now is testing. They haven’t been able to do the type of testing
volume that they would like to do.

DR. FITZMAURICE: Is that because they can’t get the particular health plans
to test with them?

MR. ARGES: Yes. What they would like, really, is a similar program that CMS
had, with a national data testing, probably a series of these, so that more
testing can occur. And the Medicaid plans are the wild card here, because I
think they need to be ready as well, and we want to be able to test with them.

DR. WARREN: Walter, you had a comment on Mike’s –

DR. SUAREZ: Well I have a comment and a question, maybe – I think there
was someone else before me? You can come back to my comment.

DR. DOO: Thanks to this panel, also – very interesting and educational
and sobering, I think we’ve said after every panel.

I guess feedback, which I sound a little bit like a broken record,
particularly for our friends at AMA, is that we would love to enforce – we
do not get the complaints. And so if people would try not to pull the
retribution card and give us a chance to help them mediate an issue that they
have when someone is not compliant, I will say that in every presentation that
I give that it’s really important that we get complaints so that we can help
the two parties become compliant together, or help whoever’s not compliant
become compliant. Did you want to add to that, Karen?

DR. TRUDEL: I wanted to clarify the issue about the national testing day.
Obviously, our messaging went totally awry, because our point here was not to
say this is the day that everybody should test, and now you’re going to have to
wait until August. Our point was to have basically a rallying call to say
here’s a good time to start, and to paraphrase after that, every day is testing
day.

So obviously, we’ve learned a lesson here and we need to refine that message
a little bit, and again, we did reach out to Medicaid. Eleven states actually
participated, starting along with everything else, and we did let — and
commercial plans know, and we’ll make sure that we reach out more to do that,
as we move forward.

MR. TENNANT: A real quick point to Lorraine – the problem is simple. A
claim is rejected, or there’s a problem – the provider often has no idea
where the problem is in the process. They go through a billing service, a
clearinghouse that makes two jumps through other clearinghouses, goes through a
proprietary clearinghouse of a health plan – ultimately gets to the health
plan. Everybody blames someone else. So the provider doesn’t know who to blame,
they just know the claim was rejected. The simplest solution, and I’m sure my
friends in the plan will not be happy, but there’s nothing in the regulation to
prevent you from going out and doing unsolicited audits, and say great, I want
to see what you’re doing on 5010, show us your books. And at least it will give
you a good sense, especially if you can gauge some of the problem areas, and we
can certainly help in that regard.

DR. WARREN: You’ve got him on the list – he’s going to give you problem
areas for us to consider.

MS. DOO: We’ve actually just done a test random audit of a health plan, so
we’re going to be doing that and we just want to make sure that our system and
our tool, actually, worked.

DR. SUAREZ: So I was just thinking, we need a HIPAA Whistleblower Protection
Act, or something like that, to ensure that people that are able to complain
about someone else can do it without any retribution.

But anyway, I’m just amazed at the amount of work and the due diligence and
the effort that all the professional associations have done and everybody else,
to try to assess where things are. I’m overblown with numbers, and as much as I
can follow numbers, I’m just amazed with the resource of the many surveys that
have been done, I really appreciate that. I wanted to comment on Mike’s
question because I think there’s an interesting point about the lab exchange
with the provider, under meaningful use, now, and this is where meaningful use
becomes a link here. And the meaningful use we provide is not going to be
required to submit lab orders with the diagnosis, and the diagnosis we’ll have
to see, because it had different codes in there.

But it’s going to be very important to make sure that we link that, because,
of course, we order with a particular code set, the lab receives that, and the
lab now has to bill with a code set as well, ICD-10 in the future, so we need
to make sure that the appropriate mapping crosses over the electronic health
record lab ordering, which is very different than the administrative lab
payment process. That’s my comment, I guess. It’s actually a very important one
to bring up, because there is a connection between the two worlds that we’re
dealing with now, and we’ll be dealing more with it.

My question was going to be about the following, basically. I think practice
management vendor systems and hospital information systems are to
administrative transactions what EHRs are to the clinical world. And when you
think again about how we handle it with EHRs and with medical use, we create a
whole world of certification for EHRs, where we know that if I buy an EHR that
is certified, that EHR is going to be capable and is going to be expected to
and required and all those things, to do the standard transactions and their
meaningful use. I think there is a possibility, perhaps an opportunity, to look
at that, and I know Rob, you probably have pointed out too some of that in the
past, of the opportunity to consider a certification program for vendors that
support these administrative transactions, because that is one way in which the
providers are not going to be depending on – I don’t know if this vendor
is – they say they’re compliant but – but there is a certification
process established.

I wanted to see the reaction of the panel to that point.

MR. TENNANT: Maybe I’ll start. You’re actually right. We brought it up to
Dr. Leavitt at the CCHIC, Dr. Bell now. Their answer was, we’d love to do it
but it wasn’t part of the Federal mandate, and they were sort of focused in on
the clinical systems.

In talking to ONC, of course, it’s still a possibility that they will fold
in the 837 and eligibility into meaningful use. If they do that, which we
happen to be opposed to for a number of reasons, it would force these to be
modules of an EHR, and therefore be certified. That would change the game plan
entirely. The problem there, of course, is what do you do with the
clearinghouse. If your practice uses a clearinghouse, does the clearinghouse
then have to be certified as an EHR module? What about the three clearinghouses
between the practice and the plan? So it becomes extremely complicated, but
there’s really no reason why CMS couldn’t reach out to CCHIT or Drummond Group
or someone like that and say could you create something, what would it take,
how could we assist, because now -– forward, not just for 5010; we
couldn’t get it done for 5010, but think about all of the ACA visions that are
coming down the pike, from EFT, health plan identifier, claim attachments
filing, so I agree with you 100 percent.

DR. WARREN: In our hearings that we had in April we asked the same question,
and got an overwhelming positive reaction from the audience that maybe it was
time to start considering that. So we may have a discussion that that might be
a recommendation that comes out of a series of hearings that we’ve been having.
George?

MR. ARGES: I think it is a good idea to think about that. I think the other
thing that you need to be careful about is, the vendors, I’m sure, like the
hospital providers, are probably overwhelmed in terms of their capital and
resource limitation, so you have to really make certain that you have a pathway
that looks at all of these IT initiatives, because if you have a certification
like you have right now with meaningful use, you have vendors who are ignoring
I-10 in some of the modules that need to happen there. They’re putting it off
and they’re trying to sell the provider on meaningful use, even though
meaningful use of stage 2 seems to be somewhat evolving as part of that
process.

So the key thing is to be certain that you have an organized pathway that
lays it out, and certification is probably a good thing as part of that
process.

MS. SPECTOR: Just one other quick thing to add to that. I think that
certification of PMS spenders and the products is a great idea, but I also
think that needs to be put into, especially the smaller practices that have
systems – some of them are very old, but they do what the practice needs
them to do, and if something comes along that says all this has to be certified
and it can’t be certified, they probably don’t have the dollars to just go out
and replace that, or they would have probably done that already, and so
something needs to be looked at in terms of if something, a requirement would
force them into a financial situation that they can’t handle at this time.

DR. WARREN: I have just got the message; Holly, are you still on the phone?
You wanted to make a comment?

MS. LOUIE: I just wanted to make a brief comment. There was a question this
morning, or a comment, from the billing company vendor perspective in helping
physicians. One of the issues is we get – similar to the labs – we
get invalid codes all the time. But now, or when we move to ICD-10, we can’t
just translate that code or change that code on behalf of the provider unless
we have a contract to provide coding services. That would be a monstrous
compliance issue to expect a vendor to take in an ICD-9 code and just decide
what ICD-10 code would be the correct one, or vice versa. So that’s not going
to be an option from a compliance perspective, and I think some providers
expect that that will happen, but it just can’t.

DR. WARREN: Raj, thank you for being patient.

DR. CHANDERRAJ: I just had follow-up comments on Lorraine – one of the
things that physicians hesitate to complain or deal with Medicare, they’re so
paranoid of being audited for things that they’re doing. In day to day work,
there’s so many regulations governing the practice, they don’t know when
they’re violating which code. And they’re worried that with the decreasing
reimbursement, that Medicare would come and audit them and ask them to pay them
so much money back. That’s why they don’t complain, and that’s why you don’t
hear anything from physicians about these regulations.

The second thing is, yes, physicians can ask the vendors to be compliant,
but they will be given a bill, or invoice, saying this cost so much. At this
point they’re afraid to ask anybody to do anything.

DR. SCANLON: To reassure Raj, maybe Lorraine or Karen didn’t update, but
when we did a study of sort of how Medicare was looking at physicians, we found
that they were on average, asked to submit medical records on one claim per
year on average. The amount of resources that Medicare devotes to auditing is
miniscule, and there’s no issue – there’s this perception out there that
Medicare is looking around every corner, but trust me, they’re not.

DR. WARREN: Okay, so a little education stuff there. Justine?

DR. CARR: I guess we’ve heard so much about the expense; at least we’re now
understanding the expense, and I think whatever we can do to get some units of
measure that you need to be thinking about whatever your hourly rate of this
type of service or that type of service, to help people build a budget, because
clearly, the ones that did budget underestimated in some cases, and others
haven’t budgeted at all, and I think because it is so cross-cutting, we don’t
even know where to put the resources, whether in IT and coding, or physician
education – there are all these areas.

So I think giving people some kind of tool kit of if you’re this size practice
or hospital, et cetera, get two of these and three of these and keep them for
six months or something like that.

DR. WARREN: In the interest of time, the way we’re going to finish our day
is I want to give a chance, if there are any public comments, and then Walter
is going to do the concluding comments, the next step.

So anybody public? Anybody else on the phone that wants to make a comment?
And then I do want to thank everybody that has hung in here for the full day
for us.

Agenda Item: Concluding comments and next
steps

DR. SUAREZ: It has been just a terrific day. I’m so glad that we organized
this and certainly it was something that was needed to understand where we are,
and to position ourselves into how we’re going to get through this first
transition to 5010.

I organized the themes, basically, into four or five major areas; some
cross-cutting themes that apply to 5010 -– ICD-10, and then some themes
that apply specifically to 5010, specifically to the Medicaid subrogation and
to ICD-10. And I’m not going to go even into the details of each of them.

But just to highlight a few of the things. So 5010 and the cross-cutting
themes: Number one, emphasize the date is the date, again, but make sure now
that people understand, because there’s a lot of talk about something called a
contingency plan, make sure that people understand that this is not a
contingency plan as in 2003; this is plans that an organization will have to
put internally to handle transitional issues. So very carefully word this
process, but emphasize the date is the date.

Secondly, education, communication and outreach – we couldn’t have
heard that more strongly, and we heard, actually, there is never enough of
about that. Everybody has done a lot of education. Half of your presentations
were about how much information you have put out there, and still we have
challenges reaching out to the Medicare providers. So there is clearly a need
to continue emphasizing the focus, but then expand now and increase the
targeted topics and priorities, to try to move into the direction of what is
needed.

Publicize the available resources, and that’s a mechanism that needs to be
put out there, that there is a lot of resources now and there might be a nice
way to put a portal where people can cross-link and chair some of those
resources. And coordination is another important point, particularly the
opportunity, perhaps, to have CMS take a leading role in that.

And this whole concept of – I mean, again, my idea of a campaign for
HIPAA testing, basically. I’m even thinking about coordinating with CBC, and
creating a campaign on have you been tested for HIPAA? If not, go to this place
or something. Have you been tested for HIPAA? Anonymous testing here, free
testing, all those things. CDC has a lot of experience about that. And Karen,
to your point, we had this interest of the testing day; I think we’re probably
going to need more like a testing week, and publicize it and coordinate across
the industry, the testing week, and perhaps repeat that throughout.

But that testing – occasionally again was one day, and then testing,
testing, testing was another theme.

The other cross-cutting theme was the State Medicaid program readiness, and
concerns around that. Some of the issues are specific to 5010, so they’re media
issues. It seems like there is a larger number of states that are at risk, not
being able to comply with 5010, than the ones that have reported to CMS about
their contingency plans or the plans for the day.

There’s a lot of rumors and sense out there that there’s states that are not
going to be ready, but haven’t yet even filed with CMS any contingency plan.

And then data concern, of course, with Medicaid’s ICD-10. Forty one states
have medium to high risk to be not able to be in committee, so potentially
establishing a deadline of a contingency plan, or the declaration of whether
they’re going to be ready or not would be helpful.

There’s a whole host of other – there are some other topics; special
consideration issues that I have been noting here. An interesting one, the
creation of an ombudsman’s office to deal with 5010/ICD10, that was an
interesting one.

There’s a whole host of policy implementation monitoring and enforcement
ideas; the cost implication, the lack of – those are just the
cross-cutting themes. Now you’re –- my list of 5010 themes. I’m going to
highlight two or three of 5010. Let’s see, the concept of not only is testing,
but the continuity of business operation now, really thinking about what’s
going to happen after January 1st and the need to begin to think
collaboratively about this – again, not a contingency plan but really the
concept of we need to handle whatever is going to come, and some ideas came out
– someone said we’re going to do a status quo, so we’re going to get
things however they can.

Someone said we’re going to use a vanilla 5010. Someone said we’re going to
recommend not to enforce strictly the transactions, and then be mindful not to
reply or reject a transaction that didn’t have this particular small element
that is not necessarily – and the concept, again, of progression versus
perfection, I like that idea. That was one theme – there’s some
transaction-specific points, there’s a lot of talk about the bigger
transactions, claims and claim payment, and eligibility.

Very, very few things about 278, the Health Care Authorization Request for
Referrals. That’s one, and there might be a couple of others that are of
special concern. And then the big warning to providers and to payors –
paper blizzard ahead. The risk of having people go down out of –- paper,
and the fact that we don’t have the staff that used to handle paper anymore, so
be mindful not to go back to paper and find other ways to handle the transition
as well.

There’s again a number of themes about D.0, particularly the testing and
some of the importance of actually – one of the themes that crossed the
board about testing as well was how we are beginning to find, as we test,
issues with the transactions that we hadn’t thought about, and now we’ve got to
fix them, and find ways to address them. So that’s a very critical element of
the testing, of the very critical value of the testing.

Medicaid subrogation, I think it was mentioned, dependency, that people see
on completing first the transition to D.0 and the fact that there is really, at
this point, not a lot of trading partners to do the testing. And then ICD-10;
there’s a whole host of themes as well, but probably bigger ones are the
concept of cross-walks and GEMS, and again, the emphasis of understanding
cross-walks and GEMS; the fact that a lot of organizations are now saying well,
initially we thought we were going to use cross-walks a lot, but now we’re
seeing that we’re going to go native to ICD-10 internally.

And then there’s this concept of proprietary cross-walks and their
implications. I think that’s a very critical aspect to address and to deal
with. Another –- the link to the products, the fact that some of the
products might not be able to handle both codes, and if people are going to go
into ICD-10 with products that only handle one of the two, then they really
have to be strong on testing and making sure that their capabilities really go
to ICD-10 only as they move to that.

A lot of resource questions – do we have enough coders? I think
Lorraine, you asked that question, concerned that geographically there might be
some issues of distribution of coders and resources. I had a little note myself
internally now that if we deal with virtual everything, so maybe we should have
a virtual coding sourcer, virtual coders, you know, you can call 1 800 CODING
and get – realistically trying to get the coding and the coders and the
coder expertise to the level that is needed for the transition.

And then I think those were some of the major themes. I guess there’s a
number of others. And then the final ones were other areas, like worker’s
compensation, I was so pleased to hear about worker’s comp and property and
casualty; this is a big opportunity that we have as we move into the next one.

So those were some of the high level themes, again a lot of information, a
lot of thoughts and recommendations. Again, my appreciation goes to all of you
for your time, for your commitment to provide this information to us. I think
just in terms of next steps, if I may just mention a few things – we are,
the subcommittee is going to be drafting our usual letter that comes after a
hearing. This one will have a lot of observations, and will probably come with
a number of recommendations as well, and we see the urgency of coming out
quickly with this, so I think we’re going to have to move this very quickly,
because some of the recommendations are, you know, by September –- by
October or by November. So we’re hoping to come up very quickly with some of
that.

And I hope that by the September meeting of our committee, we will have a
formal letter presented to the Committee.

PARTICIPANT: Is that timing going to be all right?

DR. SUAREZ: Between now and September?

PARTICIPANT: I mean, do we need it sooner?

DR. SUAREZ: We can try to do it sooner. It’s something that we will work
with –

MS. GREENBERG: If we just needed to have – if it’s ready and we can
have an open teleconference, as we have done –.

DR. SUAREZ: So that is my summary.

MS. GREENBERG: Well thank you Walter; you’re always excellent at
summarizing, and thank you Judy and Walter, and thank you Lorraine for the
incredible group you put together. On the one hand, I’m sort of stunned by
numbers, and information, and maybe it’s because we’ve been meeting for three
days here, but at the same time, I’m really impressed by how very seriously
everybody, first of all, is taking the transition. I’d like to see the donut
rather than the hole, or the cup as being half full rather than half empty, and
I do think there’s a lot of encouraging news. Obviously there’s a lot of work
yet to be done, but I was very impressed by all of the panel, they were just
outstanding, and I think we should give them all a hand.

We know that it’s time-consuming to prepare this testimony, obviously you
don’t have a lot of time on your hands, everyone’s made that very clear. But I
think it’s been very valuable.

A few things that were asked for and obviously we’ll be chewing over all of
this, but one was this idea of sort of laying out some scenarios. And I know
one size doesn’t fit all and I understand that, for sure, even within a
stakeholder group, but it does, and this kind of also links to maybe some best
practices.

It does seem that we heard about, and certainly those of you that are
working with your constituencies, are hearing about approaches that have
promise, are working better than other approaches, and approaches that people
are taking to dealing with all these different requirements and staging them,
et cetera. And although there’s just not one, it does seem that there’s some
opportunity for laying out some scenarios about how different activities can
contribute to a successful progression among these different – and how
they’re all connected to each other.

And of course, we’ve mostly talked about 5010, ICD-10 and then some of the
pharmacy issues, but also I think the work that is being done related to
meaningful use and some of the other mandates, so I do think that it does need
to be more messaging about how these things can support each other, how they
relate to each other, and how – different views, of course – how
doing one thing first before another might be helpful and people may differ on
that, but I think people – right now it sounds like I’m feeling very
overwhelmed, and understandably so, but there’s more kind of scenario building,
and also more of describing what seemed to be some good practices – I’m
thinking of when the gentleman from Michigan Blue Cross; I think he made a very
clear presentation about how they’re proceeding. It’s not the only way to
proceed, but I was impressed by that and thinking that there were more kernels
also that I heard, and there are many more out there that weren’t even
mentioned.

So I do think that type of messaging and that type of trying to get out both
useful scenarios and good practices, will help people maybe kind of fit all
this together and see what their next steps are and how this might all come
out.

So that’s not just a recommendation – it’s really the department
working with all of these fabulous groups and stakeholder groups to try to get
more of that type, rather than do this, do that, but sort of a bigger picture
out to the different aspects of the industry. So that was all I wanted to say,
as kind of a take-home message that I heard.

And I just want to thank everyone. I want to thank our co-Chairs, as I said
our, Chair, I want to thank our staff and Marietta Squire, Jeannine and our
transcribing people, our audio/visual people. You’ve hung in there with us. I
did hear from Katherine Jones, who was listening on the web, that it was very
clear on the web, that the slide presentations were very good and accessible
and all of that, so I thank all of those who participated on the web, and I
hope that they found this useful too. So thank you.

DR. CARR: I never cease to come away so much better informed when I come
here, and I think it’s kind of the multidisciplinary contributions, just the
parts make up the whole, and we can hear about individual parts, but when
everybody comes together we just get so much smarter, so thank you for such a
thoughtful panel and thank you for the great contributions.

DR. WARREN: We are done, guys, it’s five o’clock, we’re on time, have a
great weekend.

(Whereupon, the meeting adjourned at 5:00 p.m.)